Consider a Market That Is in Equilibrium

question 12

Multiple Choice

Consider a market that is in equilibrium.If it experiences both a decrease in demand and a decrease in supply,what can be said of the new equilibrium? The equilibrium:

• A) price and quantity will both fall.
• B) quantity will definitely fall, while the equilibrium price cannot be predicted.
• C) price will definitely fall, while the equilibrium quantity cannot be predicted.
• D) price and quantity will both rise.

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Definitions:

Tax Rate

The percentage at which an individual or corporation is taxed by the government.

Preference Shares

A type of stock that provides holders with priority over common stockholders in the distribution of dividends and assets upon liquidation.

Fair Value

The sum likely to be fetched for selling an asset or the expense incurred to pass on a liability, within a structured deal among participants in the market at the time of assessment.