If supply increases while demand decreases by Dr. Robert Murphy

Question 59 / 96: 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.

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https://www.jobilize.com/capitalism-the-market-economy-by-dr-robert-murphy-mises

Capitalism: The Market Economy

Access: Public Peer Review

Dr.Robert MurphyAssociated Scholar

Mises Institute

USA

Attribution: Dr. Robert P. Murphy, Lessons for the Young Economist. (Mises Institute), http://mises.org/document/6215/Lessons-for-the-Young-Economist (Accessed 04 April, 2014). License: Creative Commons BY

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