question archive If the supply of a product decreases and the demand for that product simultaneously increases, we can conclude that equilibrium A
If the supply of a product decreases and the demand for that product simultaneously increases, we can conclude that equilibrium A
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If the supply of a product decreases and the demand for that product simultaneously increases, we can conclude that equilibrium
A. price must rise, but equilibrium quantity may either rise, fall, or remain unchanged.
B. price must rise and equilibrium quantity must fall.
C. price and equilibrium quantity must both increase.
D. quantity must decrease, but equilibrium price may either rise, fall, or remain unchanged.
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A. price must rise, but equilibrium quantity may either rise, fall or remain unchanged.
It is because with fall in supply and simultaneous rise in demand will prices will increase because more people are available for demanding the product. On the other hand, the effect on quantity is dependent on whether the fall in supply is greater than, equal to, or less than the rise in demand.
