An increase in demand and a decrease in supply will lead to an
A) unambiguous increases in both price and quantity.
B) unambiguous decreases in both price and quantity.
C) an unambiguous increase in quantity, but the effect on price is indeterminate.
D) an unambiguous increase in price, but the effect on quantity is indeterminate.

Question

Quizplus · Accepted Answer

When there is an increase in demand and a decrease in supply, it is very likely that the price will increase but the effect on quantity is uncertain. Therefore, option D is the best choice.

An Increase in Demand and a Decrease in Supply Will