Suppose There Is a Decrease in Both the Demand for and Supply

question 43

Multiple Choice

Suppose there is a decrease in both the demand for and supply of a good.What happens to equilibrium price and quantity?

• A) Equilibrium quantity increases, but the effect on equilibrium price is ambiguous.
• B) Equilibrium quantity decreases, but the effect on equilibrium price is ambiguous.
• C) Equilibrium price increases, but the effect on equilibrium quantity is ambiguous.
• D) Equilibrium price decreases, but the effect on equilibrium quantity is ambiguous.

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Definitions:

Addicted Newborn

A newborn suffering from withdrawal symptoms as a result of exposure to addictive substances while in the womb.

Narcotic

A drug that relieves pain and induces drowsiness, stupor, or insensibility, often used medically for pain relief but can be addictive and abused.

Withdrawal Symptoms

Physical or psychological effects experienced when reducing or discontinuing a substance that the body has become dependent on.

Vitamins

Organic compounds that are essential for normal growth and nutrition, required in small quantities in the diet because they cannot be synthesized by the body.