Which of the following would cause an increase in the equilibrium price and decrease in the equilibrium quantity of watermelon?
A)a decrease in demand and an increase in supply
B)a decrease in supply
C)an increase in demand and an increase in supply greater than the increase in demand
D)an increase in demand and an increase in supply

Question

Quizplus · Accepted Answer

A decrease in supply would cause a decrease in the equilibrium quantity and an increase in the equilibrium price of watermelons due to scarcity. A decrease in demand will decrease both the equilibrium price and quantity. An increase in demand and supply will lead to an increase in the equilibrium quantity but a change in the equilibrium price will depend on the comparative increase in demand and supply. Thus, B is the only option that will cause an increase in equilibrium price and a decrease in equilibrium quantity.

Which of the Following Would Cause an Increase in the Equilibrium