When demand falls and supply rises,equilibrium price will __________ and equilibrium quantity will __________.

Question

Quizplus · Accepted Answer

If demand falls and supply rises, there will be an excess supply of the product in the market. To clear this excess supply, producers will decrease the price of the product, resulting in a fall in equilibrium price. The equilibrium quantity may rise, fall or stay the same, depending on the magnitude of the changes in demand and supply. Therefore, the best choice is A, as it correctly identifies the fall in equilibrium price and acknowledges that the equilibrium quantity can change in any direction.

When Demand Falls and Supply Rises,equilibrium Price Will __________ and Equilibrium