Which of the following statements is true?
A)A decrease in demand causes a decrease in the equilibrium price; the decrease in price causes supply to decrease.
B)A decrease in demand causes the equilibrium price to fall; the decrease in price then results in a decrease in quantity supplied.
C)If both demand and supply increase,there must be an increase in the equilibrium price; equilibrium quantity may either increase or decrease.
D)If demand decreases and supply increases one cannot determine if the equilibrium price will increase or decrease without knowing which change is greater.

Question

Quizplus · Accepted Answer

When there is a decrease in demand, the equilibrium price falls. This then creates a surplus of goods, resulting in a decrease in quantity supplied to reach a new equilibrium. This is known as the law of demand and is a fundamental principle of economics. None of the other options is accurate or complete.

Which of the Following Statements Is True