Suppose That Demand for a Good Decreases And,at the Same

question 56

Multiple Choice

Suppose that demand for a good decreases and,at the same time,supply of the good decreases.What would happen in the market for the good?

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

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Definitions:

Factory Payroll

The total amount of salaries and wages paid to employees working in a factory, directly related to manufacturing operations.

Direct Labor

Costs associated with the employees who are directly involved in the production of goods or services.

Indirect Labor

Labor costs associated with support work that does not directly contribute to the production of goods or provision of services but is necessary for operations.