Question

Which of the following statements is correct? Multiple Choice If supply decreases and demand remains constant, equilibrium price will fall. If supply decreases and demand increases, equilibrium quantity is indeterminate. If supply increases and demand remains constant, equilibrium price will rise. If supply increases and demand increases, equilibrium quantity will fall. If supply increases and demand increases, equilibrium price will rise.

Answer 1

The statement that is correct is D. If supply increases and demand increases, equilibrium quantity will fall.

Demand is the quantity of goods and services that one is willing to buy at a particular price and at a given time.

On the other hand, supply is the quantity of goods that a supplier wants to sell at a given price and time.

It should be noted that in a situation whereby there's an increase in the supply and the demand of a product, this will lead to a reduction in the equilibrium quantity.

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