Question

If the demand curve decreases while the supply curve increases, what will be the result in terms of the new equilibrium price and quantity?

MCQ Options:
a. The new equilibrium price will increase, and the new equilibrium quantity will decrease.
b. The new equilibrium price will decrease, and the new equilibrium quantity will increase.
c. Both the new equilibrium price and quantity will increase.
d. Both the new equilibrium price and quantity will decrease.

Answer 1

When the demand curve decreases while the supply curve increases, the new equilibrium price will decrease and the new equilibrium quantity will increase.

Step-by-step explanation:

When the demand curve decreases while the supply curve increases, the new equilibrium price and quantity will depend on the magnitude and direction of the shifts. However, as a general rule, when the demand curve shifts downwards and the supply curve shifts upwards, the new equilibrium price will decrease and the new equilibrium quantity will increase.