If we observe a decrease in the equilibrium quantity of good A,we know that
A)either the demand for A has increased or the supply of A has decreased or both.
B)either the demand for A has increased or the supply of A has increased or both.
C)either the demand for A has decreased or the supply of A has increased or both.
D)either the demand for A has decreased or the supply of A has decreased or both.
E)the price of A has fallen.

Question

Quizplus · Accepted Answer

According to the law of demand and supply, if the equilibrium quantity of good A decreases, it means that either the demand for A has decreased or the supply of A has decreased or both. Therefore, option D is correct. Option A and B are incorrect because they include the possibility of an increase in either demand or supply, while the question specifically mentions a decrease in equilibrium quantity. Option C is also incorrect because it includes the possibility of a decrease in demand, which would lead to a further decrease in equilibrium quantity, and not a decrease in demand. Option E is incorrect because the question does not provide any information about changes in the price of good A.

If We Observe a Decrease in the Equilibrium Quantity of Good