All other factors being constant, a reduction in price tends to cause which of the following?
A) an increase in supply and an increase in demand
B) a reduction in supply and an increase in demand
C) an increase in quantity supplied and a reduction in quantity demanded
D) a reduction in quantity supplied and an increase in quantity demanded

Question

Quizplus · Accepted Answer

According to the law of demand, when the price of a good or service decreases, the quantity demanded increases. At the same time, the law of supply states that when the price of a good or service decreases, the quantity supplied also decreases. Therefore, a reduction in price would result in a reduction in quantity supplied and an increase in quantity demanded.

All Other Factors Being Constant, a Reduction in Price Tends