If Demand Increases and Supply Decreases, What Is the Effect

question 111

Multiple Choice

If demand increases and supply decreases, what is the effect on equilibrium price and equilibrium quantity?

• A) The price falls and the quantity might increase, decrease, or remain the same.
• B) The price rises and the quantity might increase, decrease or remain the same.
• C) The quantity decreases and the price might rise, fall, or remain the same.
• D) The quantity increases and the price might rise, fall, or remain the same.

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Definitions:

Asset Account

Accounts that represent the different types of resources owned by a business, which have economic value and can provide future benefits.

Liability Account

records and tracks obligations or debts that a company owes to others, such as loans, mortgages, accounts payable, and other financial liabilities.

Overstated

A term used when the value of an asset or income is recorded higher than it actually is, leading to inaccuracies in financial reporting.

Liability Account

A financial reporting category used to track obligations or debts a company owes to others.