If we observe a fall in the equilibrium price of good A,we know that the demand for A has
A)increased or the supply of A has decreased or both.
B)increased or the supply of A has increased or both.
C)decreased or the supply of A has increased or both.
D)decreased or the supply of A has decreased or both.
E)not changed.

Question

Quizplus · Accepted Answer

A fall in the equilibrium price of good A suggests that either the demand for A has decreased (leading to lower prices as consumers are less willing to buy) or the supply of A has increased (leading to lower prices as more of the good is available), or both these factors have occurred simultaneously.

If We Observe a Fall in the Equilibrium Price of Good