If both supply and demand decrease simultaneously, the new equilibrium price is ___________ and the new equilibrium quantity is _________________.
A)lower; lower
B)lower; indeterminate
C)indeterminate; higher
D)indeterminate; lower

Question

Quizplus · Accepted Answer

When both supply and demand decrease, the equilibrium quantity will definitely decrease, but the effect on equilibrium price is indeterminate because it depends on the relative magnitudes of the shifts in supply and demand.

If Both Supply and Demand Decrease Simultaneously, the New Equilibrium