Question

When demand decreases in a graph of demand and supply: O equilibrium price will decrease, but equilibrium quantity will increase. o both equilibrium price and quantity will decrease. O equilibrium price will increase, but equilibrium quantity will decrease. O both equilibrium price and quantity will increase.

Answer 1

Both equilibrium price and quantity will decrease. Decrease in demand is shown by inward shift of the demand curve. At the original price there is currently a surplus of the given commodity. This creates a downward pressure on the price due to which both price and the quantity fall. Second option is correct

Equilibrium price will increase but equilibrium quantity will decrease. This happens because there is an inward shift of the supply curve. At the current price, there is a shortage due to which there is an upward pressure on the price. As a result price increases and quantity decreases. Third option is correct.