If Demand Increases and Supply Decreases, Then Equilibrium Price Must

question 32

True/False

If demand increases and supply decreases, then equilibrium price must decrease, but equilibrium quantity is indeterminate.

---

Definitions:

Prices

The amount of money required to purchase a good, service, or asset, often influenced by supply and demand.

Short-run

A period in which at least one factor of production is fixed, limiting the ability of a business to fully adjust to market changes.

Short-run Aggregate Supply

The total supply of goods and services that firms in an economy plan on selling during a specific time period at current prices.

Short-run Phillips Curve

It illustrates the inverse relationship between the rate of inflation and the unemployment rate in the short term.