Suppose That Demand Increases and Supply Decreases

question 269

Multiple Choice

Suppose that demand increases and supply decreases. What would we expect to happen in the market?

• A) Equilibrium price would decrease, but the impact on quantity would be ambiguous.
• B) Equilibrium price would increase, but the impact on quantity would be ambiguous.
• C) Both equilibrium price and quantity would increase.
• D) Both equilibrium price and quantity would decrease.

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Definitions:

Quasi-experimental Designs

Research designs that attempt to establish a cause-and-effect relationship but lack random assignment to groups.

Random Assignment

Random assignment is a method used in experiments to assign participants or subjects to different groups in a way that is completely by chance, ensuring the groups are statistically similar in all respects at the start of the experiment.

Quasi-experimental Design

An empirical study used to estimate the causal impact of an intervention on target population without random assignment. It is a rephrased definition highlighting its purpose for estimating causal relations.

True Experiments

Experimental designs in which the researcher manipulates the independent variable to observe its effect on a dependent variable, with random assignment to control and experimental groups.