Assuming that the demand and supply of a good both decreased by the same amount, the new equilibrium would represent:
A)an increase in price and an increase in quantity exchanged.
B)no change in price and an increase in quantity exchanged.
C)a decrease in price and a decrease in quantity exchanged.
D)no change in price, and decrease in quantity exchanged.

Question

Assuming that the demand and supply of a good both decreased by the same amount, the new equilibrium would represent:
A)​an increase in price and an increase in quantity exchanged.
B)​no change in price and an increase in quantity exchanged.
C)​a decrease in price and a decrease in quantity exchanged.
D)​no change in price, and decrease in quantity exchanged.

Quizplus · Accepted Answer

When both demand and supply decrease by the same amount, the equilibrium quantity exchanged decreases because there are fewer goods being bought and sold. However, the price remains unchanged because the decrease in demand (which would normally lower the price) is offset by the decrease in supply (which would normally increase the price).

Assuming That the Demand and Supply of a Good Both