An Increase in Demand and a Decrease in Supply Occur

question 45

Multiple Choice

An increase in demand and a decrease in supply occur in a market. What happens to the equilibrium price and quantity?

• A) The equilibrium price decreases; the change in the equilibrium quantity is ambiguous.
• B) The equilibrium price decreases; the equilibrium quantity increases.
• C) The equilibrium price increases; the change in the equilibrium quantity is ambiguous.
• D) The equilibrium price increases; the equilibrium quantity decreases.

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Definitions:

Standard Deviation

A statistical measure that quantifies the amount of variation or dispersion of a set of data values from their mean.

Dividend Yield

The dividend per share divided by the price per share, indicating how much a company pays out in dividends each year relative to its stock price.

Capital Gain

The profit from the sale of assets or investments when the sale price exceeds the purchase price.

Geometric Average Return

The average rate of return of an investment calculated by multiplying n variables and then taking the n-th root.