Question

A decrease in demand and an increase in supply will Multiple Choice affect price in an indeterminate way and decrease the equilibrium quantity. increase price and affect the equilibrium quantity in an indeterminate way. decrease price and affect the equilibrium quantity in an indeterminate way. increase price and increase the equilibrium quantity.

Answer 1

Answer:

Decrease price and affect the equilibrium quantity in an indeterminate way.

Explanation:

When there is a fall in the demand for a particular product then as a result there is a leftward shift in the demand curve for this product. On the other hand, if there is an increase in the supply of a product then as a result there is a rightward shift in the supply curve of this product.

Hence, there is a fall in the equilibrium price level and the effect on equilibrium quantity is indeterminate because we don't know the magnitude of the shifts of demand and supply curve.