If the demand for a good increases a the same time the supply of the good decreases,what happens to equilibrium price and quantity?
A) Equilibrium quantity increases, but the effect on equilibrium price is ambiguous
B) Equilibrium quantity decreases, but the effect on equilibrium price is ambiguous
C) Equilibrium price increases, but the effect on equilibrium quantity is ambiguous
D) Equilibrium price decreases, but the effect on equilibrium quantity is ambiguous change "a" to "and at"

Question

Quizplus · Accepted Answer

When demand for a good increases, it puts upward pressure on both the equilibrium price and quantity. Conversely, when supply decreases, it also puts upward pressure on the price due to scarcity but downward pressure on the quantity. Therefore, the equilibrium price will definitely increase, but the effect on quantity is ambiguous because the increase in demand suggests a higher quantity might be sold, while the decrease in supply suggests a lower quantity will be available.

If the Demand for a Good Increases a the Same