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:

Cash Inflows

The total amount of money being transferred into a business, usually from its operations, investments, or financing.

Capital Outlay

Expenditures for acquiring or upgrading physical assets such as equipment or property.

Average Rate of Return

A measure of the profitability of an investment, calculated by dividing the average annual profit by the initial investment cost.

Present Values

The current valuation of a future financial gain or series of payments, after applying a specific return rate.