The demand for a good decreases by 10 percent and the supply of the good decreases by 8 percent. Does the price of the good rise or fall? Why?

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09-06-2021
Business

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The demand for a good decreases by 10 percent and the supply of the good decreases by 8 percent. Does the price of the good rise or fall? Why?

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ewomazinoade ewomazinoade · Answer 1 · 2021-06-09T20:27:45+02:00

Answer:

price decreases

A decrease in demand leads to a leftward shift of the demand curve. As a result equilibrium price and quantity decreases

A decrease in supply leads to a leftward shift of the demand curve. As a result, equilibrium price increases while equilibrium quantity decreases

Taking these two effects together, because the fall in demand is greater (10%) than the fall in supply(8%), there would be a decrease in equilibrium quantity and equilibrium price

Explanation:

The demand for a good decreases by 10 percent and the supply of the good decreases by 8 percent. Does the price of the good rise or​ fall? Why?

Respuesta :

Otras preguntas

The demand for a good decreases by 10 percent and the supply of the good decreases by 8 percent. Does the price of the good rise or fall? Why?