We cannot predict the effect on the equilibrium quantity, but know that the market clearing price will decrease when
A) supply increases and demand decreases.
B) supply decreases and demand increases.
C) supply decreases and at the same time demand increases.
D) supply increases and at the same time demand decreases.

Question

Quizplus · Accepted Answer

When supply increases and demand decreases, there will be an excess supply which will cause prices to decrease until market clears. Therefore, the market clearing price will decrease. However, we cannot predict the effect on the equilibrium quantity.

We Cannot Predict the Effect on the Equilibrium Quantity, but Know