Suppose that demand for black market koala skins increases AND supply decreases because of falling koala populations. What would happen in the black market for koala skins?

Question

Quizplus · Accepted Answer

With an increase in demand and a decrease in supply, it is likely that the equilibrium price will increase. However, the impact on equilibrium quantity is ambiguous as it depends on the extent of the decrease in supply and the responsiveness of demand to the increase in price. It is possible that the decrease in supply may offset the increase in demand, leading to a decrease in equilibrium quantity.

Suppose That Demand for Black Market Koala Skins Increases AND Supply