If the Demand for a Good Increases at the Same

question 30

Multiple Choice

If the demand for a good increases at the same time the supply of the good decreases,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:

Personal Liability

The responsibility of an individual to bear the financial costs associated with damages or debt from their actions or business dealings.

Sole Proprietorship

A business owned and operated by one person, who is solely responsible for its liabilities and entitled to its profits.

Legal Entity

An organization or system that has its own legal identity, allowing it to own property, enter into contracts, and be sued or sue.

Sole Proprietorship

A business structure where a single individual owns and operates the business, bearing full responsibility for its debts and obligations.