Related to the Economics in Practice on page 77: If a hurricane results in the supply of hotel rooms decreasing and the demand for hotel rooms increases, the equilibrium price for hotel rooms ________ and the equilibrium quantity of hotel rooms ________.
A) will increase; will decrease
B) will increase; may increase, decrease, or stay the same
C) may increase, decrease, or stay the same; will decrease
D) may increase, decrease, or stay the same; may increase, decrease, or stay the same

Question

Quizplus · Accepted Answer

The equilibrium price for hotel rooms will increase due to the simultaneous decrease in supply (fewer hotel rooms available because of the hurricane damage) and increase in demand (more people needing rooms, possibly due to displacement). The equilibrium quantity, however, is uncertain without more information because the decrease in supply and increase in demand have opposing effects on the quantity, making it possible for the quantity to increase, decrease, or stay the same.

Related to the Economics in Practice on Page 77: If