What happens to the equilibrium price and quantity when demand increases and simultaneously supply decreases, and the relative size of the shifts is not known? The equilibrium price falls, and the change in the equilibrium quantity is ambiguous. The equilibrium price rises, and the change in the equilibrium quantity is ambiguous. The equilibrium quantity rises, and the change in the equilibrium price is ambiguous. The equilibrium quantity falls, and the change in the equilibrium price is ambiguous.
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We have two simultaneous changes: an increase in demand and a decrease in supply. The relative size of these shifts is unknown. Show more…
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