If market demand increases and market supply decreases, then equilibrium quantity will (be) ____ and equilibrium price will (be) ____.
A)indeterminate; decrease
B)indeterminate; increase
C)decrease; decrease
D)increase; increase

Question

If market demand increases and market supply decreases, then equilibrium quantity will (be) ____ and equilibrium price will (be) ____.
A)​indeterminate; decrease
B)​indeterminate; increase
C)​decrease; decrease
D)​increase; increase

Quizplus · Accepted Answer

When market demand increases and market supply decreases, the equilibrium price will definitely increase due to higher demand and lower supply. However, the effect on equilibrium quantity is indeterminate without knowing the magnitude of the shifts in demand and supply.

If Market Demand Increases and Market Supply Decreases, Then Equilibrium