Question

If supply and demand for a good both decrease, which of the following is true? Group of answer choices Equilibrium quantity will decrease but we cannot say for sure what will happen to equilibrium price. Equilibrium price and quantity will both decrease. Equilibrium price will increase but we cannot say for sure what will happen to equilibrium quantity. Equilibrium price will decrease but we cannot say for sure what will happen to equilibrium quantity. Equilibrium quantity will increase but we cannot say for sure what will happen to equilibrium price.

Answer 1

Answer:

Equilibrium quantity will increase but we cannot say for sure what will happen to equilibrium price.

Explanation:

Last statement is correct:

Whenever the supply and demand moves in the same direction that is if one increases other also increases or vice-versa.

Then, the quantity can be determined but the price cannot be determined.

As with decrease in the supply, the quantity supplied will be less, and since demand is also less, the quantity at equilibrium will also be less, and will be identified properly.

But as we discuss the price, it not only depends on the demand and supply, but would depend on consumer as well as producer behavior.

The consumer wants to buy at less price, but the producer will tend to sale it at a higher price, therefor, with this pressure which is inverse in nature, the degree or range of price can be identified but that the price cannot be determined, it might increase or decrease.