Card 61 / 100: If supply increases while demand decreases, what can we say about the change in (equilibrium) price? What about the change in (equilibrium) quantity?
Answer:
The equilibrium price will definitely drop, because both changes point in that direction. However, we don't know what will happen to the equilibrium quantity, because the supply shift tends to increase it, while the demand shift tends to decrease it. Without more information we don't know which effect will dominate.
Previous Card | ← Previous Card Button |
Next Card | → Next Card Button |
Flip Card | Space-Bar |
|