Asked by Donna Mowell on Jun 05, 2024
Verified
When demand falls and supply rises,equilibrium price will __________ and equilibrium quantity will __________.
A) fall;either rise,fall or stay the same
B) rise;rise
C) either rise,fall or stay the same
D) fall;fall
Equilibrium Price
The price at which the quantity of a good demanded equals the quantity supplied, leading to market balance.
Equilibrium Quantity
The amount of goods or services that is supplied and demanded at the equilibrium price.
- Analyze how external factors influence supply and demand, leading to changes in market conditions.
- Understand the effects of supply and demand modifications on the balance between price and quantity.
Verified Answer
JR
jessica remorenkoJun 11, 2024
Final Answer :
A
Explanation :
If demand falls and supply rises, there will be an excess supply of the product in the market. To clear this excess supply, producers will decrease the price of the product, resulting in a fall in equilibrium price. The equilibrium quantity may rise, fall or stay the same, depending on the magnitude of the changes in demand and supply. Therefore, the best choice is A, as it correctly identifies the fall in equilibrium price and acknowledges that the equilibrium quantity can change in any direction.
Learning Objectives
- Analyze how external factors influence supply and demand, leading to changes in market conditions.
- Understand the effects of supply and demand modifications on the balance between price and quantity.