If Both Supply and Demand Simultaneously Decrease

question 226

Multiple Choice

If both supply and demand simultaneously decrease

• A) the market clearing price definitely rises, and the equilibrium quantity definitely falls.
• B) the market clearing price definitely rises, and the effect on the equilibrium quantity is indeterminate.
• C) the market clearing price definitely falls, and the effect on the equilibrium quantity is indeterminate.
• D) the effect on the market clearing price is indeterminate, and the equilibrium quantity definitely falls.

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Definitions:

Department Manager

An individual responsible for overseeing the operations, budget, and personnel of a specific department within a company.

Revenues

The total income generated by a company from its business activities, such as the sale of goods or provision of services, before any expenses are deducted.

Profit Margin

A financial ratio that shows the percentage of revenue that exceeds the cost of goods sold, indicating the efficiency at which a company generates profit.

Activity Base

A measure used to allocate costs to products or services, based on the amount of activity or volume of services or products that incur those costs.