A simultaneous increase in demand and decrease in supply would lead to:
A) increase in the equilibrium price and a decrease in the quantity sold.
B) increase in both the equilibrium price and the quantity sold.
C) decrease in both the equilibrium price and the quantity sold.
D) uncertain effect on the equilibrium quantity but an increase in the equilibrium price.

Question

Quizplus · Accepted Answer

An increase in demand tends to raise both price and quantity, while a decrease in supply tends to raise price but lower quantity. The net effect on quantity is uncertain, but the price will definitely increase.

A Simultaneous Increase in Demand and Decrease in Supply Would