We cannot predict the effect on the equilibrium quantity, but know that the market clearing price will decrease when
A) supply increases and demand increases.
B) supply decreases and demand decreases.
C) supply decreases and at the same time demand increases.
D) supply increases and at the same time demand decreases.

Question

Quizplus · Accepted Answer

When supply increases and demand decreases, the market clearing price will decrease. This is because there will be a surplus of goods, and sellers will have to lower the price to entice buyers to purchase their goods. However, we cannot predict the effect on the equilibrium quantity without information on the elasticity of supply and demand.

We Cannot Predict the Effect on the Equilibrium Quantity, but Know