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.

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Definitions:

Inputs

The resources used in the production process, including labor, capital, materials, and energy.

Constant Returns To Scale

A situation in which increasing all inputs by a certain factor leads to an increase in output by the same factor, indicating proportionate scaling in production.

Production

This refers to the process of creating goods and services through the combination of labor, materials, and technology.

Cost

The monetary value required to produce or acquire goods or services.