when both the suppy and demand decrease in same proportion than what will be the answer
Answers
Answer:
. There are 3 cases of decrease in demand and supply.
1) When both demand and supply decrease in the equal proportion the price will remain same but the equilibrium quantity will decrease.
2) When decrease in demand is more than the decrease in supply both equilibrium quantity and price will decrease.
3) When decrease in demand is less than decrease in supply the equilibrium price will rise and equilibrium quantity will increase.
B. There are 3 cases for increase in demand and supply.
1) when increase in demand and supply is equal the equilibrium quantity will increase but there will be no change in equilibrium price.
2) When increase in demand is more than increase in supply there is an increase in equilibrium price as well as quantity but increase in quantity is more than increase in equilibrium price.
3) When increase in demand is less than increase in supply there is an increase in equilibrium price and equilibrium quantity.
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PLEASE MARK AS BRAINLIEST ANSWER........
When the supply and demand decrease in same proportion,the equilibrium quantity will decrease and the equilibrium price will be restored at its original position or value.
Explanation:
If the market supply decreases initially as reflected by the leftward shift of the supply curve,the equilibrium quantity will decrease and the equilibrium price will increase consequently.Now, when the market demand decreases in the same proportion,as represented by a leftward shift of the demand curve,the equilibrium quantity decreases further and the lower demand would cause the equilibrium price to again decrease and restore at its original position or value before any changes in the market supply and demand.