Consider a Market That Is in Equilibrium

question 103

Multiple Choice

Consider a market that is in equilibrium. If the market experiences a decrease in demand:

• A) the equilibrium price and quantity will rise.
• B) the equilibrium price will rise and the equilibrium quantity will fall.
• C) the equilibrium price and quantity will fall.
• D) the equilibrium price will fall and the equilibrium quantity will rise.

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Definitions:

P(B)

The probability of event B occurring in a statistical experiment.

Independent Events

Two events that have no influence on each other's occurrence, meaning the probability of one does not affect the other.

P(A And B)

The probability that events A and B both occur, which can be calculated directly or via the multiplication rule for independent events.

P(B|A)

The likelihood of event B happening after event A has already taken place.