Question

Which of the following would cause both the equilibrium price and the equilibrium quantity to decrease?

a.an increase in demand
b. a decrease in demand
c.an increase in supply
d.a decrease in supply

Answer 1

The option that would cause both the equilibrium price and equilibrium quantity to decrease is a decrease in demand.

Step-by-step explanation:

The question addresses how changes in market conditions affect equilibrium price and equilibrium quantity in a given market. To determine which of the options would cause both the equilibrium price and equilibrium quantity to decrease, we need to analyze each scenario:

• An increase in demand usually raises both equilibrium price and quantity.
• A decrease in demand leads to a lower equilibrium price and quantity.
• An increase in supply typically lowers equilibrium price but increases equilibrium quantity.
• A decrease in supply tends to raise the equilibrium price and lower the quantity.

Therefore, the option that would result in a decrease in both equilibrium price and quantity is a decrease in demand.