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8. Assume there is a simultaneous increase in demand and a decrease in supply. The result...

8. Assume there is a simultaneous increase in demand and a decrease in supply. The result of this will be a definite increase in the equilibrium price but an uncertain impact on the equilibrium quantity.

True or False

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Answer #1

True

Explanation: The price will definately go up because of a simultaneous increase in demand and a decrease in supply. However, the quantity will depend upon the relative change in demand and supply. If the right ward shift of demand curve is higher than the leftward shift of the suply curve, quantity demanded will go up. On the other hand, if the right ward shift of demand curve is lower than the leftward shift of the suply curve, quantity demanded will go down.

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