If market demand decreases and market supply increases, then equilibrium quantity will (be) ____ and equilibrium price will (be) ____.
A)indeterminate; decrease
B)indeterminate; increase
C)decrease; indeterminate
D)increase; indeterminate

Question

If market demand decreases and market supply increases, then equilibrium quantity will (be) ____ and equilibrium price will (be) ____.
A)​indeterminate; decrease
B)​indeterminate; increase
C)​decrease; indeterminate
D)​increase; indeterminate

Quizplus · Accepted Answer

When market demand decreases, it puts downward pressure on both price and quantity. When market supply increases, it also tends to lower the price but increases the quantity available. The combined effect will definitely lower the price (as both shifts contribute to this outcome), but the effect on quantity is indeterminate because the decrease in demand and the increase in supply have opposing effects on quantity.

If Market Demand Decreases and Market Supply Increases, Then Equilibrium