When Demand Increases and Supply Decreases by the Same Amount

question 139

Multiple Choice

When demand increases and supply decreases by the same amount, the equilibrium quantity ________ and the equilibrium price ________.

• A) decreases; might rise, fall or not change
• B) does not change; rises
• C) decreases; rises
• D) decreases; falls
• E) does not change; might rise, fall or not change

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Definitions:

Exact Value

The precise numerical quantity or measurement of an item or variable, often crucial in calculations or analyses.

Bidders

Individuals or entities that offer a price for goods or services, especially at auctions.

Winner's Curse

A phenomenon in auctions where the winner tends to overpay due to incomplete information or overly optimistic valuation of the asset.

Rivals' Information

Data or intelligence about competitors’ strategies, performance, and operations, useful for gaining a competitive advantage in the market.