If Demand and Supply Both Decrease

question 169

Multiple Choice

If demand and supply both decrease

• A) the equilibrium quantity definitely will decrease, and the market clearing price definitely will decrease.
• B) the equilibrium quantity definitely will decrease, and the market clearing price definitely will increase.
• C) the market clearing price definitely will decrease, but the change in the equilibrium quantity cannot be determined without more information.
• D) the equilibrium quantity definitely will decrease, but the change in market clearing price cannot be determined without more information.

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Definitions:

Opportunity Cost

The expense of not choosing the second-best option while making a choice.

Machinery

Mechanical devices or assemblies, often powered by electricity or engines, that perform specific tasks, commonly used in industries for production processes.

Petroleum

A natural, flammable liquid found in the Earth's formations, composed of a complex mixture of hydrocarbons and used primarily as fuel.

Opportunity Cost

The value of the best alternative forgone when a decision is made to pursue a particular course of action.