If market demand increases and market supply decreases, the change in equilibrium price is unpredictable without first knowing the exact magnitudes of the demand and supply changes.

a. True

b. False

The given statement is false.

Explanation:

A decrease in the market demand will cause the demand curve to shift to the right. While a decrease in the supply will cause the supply curve to shift to the left.

The market equilibrium price is determined by the intersection of demand and supply. The price, as a result, will increase. The extent of increase in price depends on the magnitudes of change in demand and supply.

The change in equilibrium quantity, however, in this case, is unpredictable without knowing the extent of changes in demand and supply.