Assume the market for ceiling fans is perfectly competitive and currently in equilibrium. If the demand increases while the supply decreases, then:

Question

Quizplus · Accepted Answer

An increase in demand and decrease in supply will cause a shortage in the market, leading to an increase in equilibrium price. The decrease in supply will also lead to a decrease in equilibrium quantity, so B and C are incorrect. D is also incorrect, as the changes in demand and supply will not cause both price and quantity to decrease.

Assume the Market for Ceiling Fans Is Perfectly Competitive and Currently