In which of the following cases will the effect on equilibrium output be indeterminate (i. e., depend on the magnitudes of the shifts in supply and demand) ? a. Demand increases and supply increases b. Demand decreases and supply decreases c. Demand decreases and supply increases d. Demand remains constant and supply increases

Question

Kylie Pennington

Business

15 February, 00:56

In which of the following cases will the effect on equilibrium output be indeterminate (i. e., depend on the magnitudes of the shifts in supply and demand) ? a. Demand increases and supply increases b. Demand decreases and supply decreases c. Demand decreases and supply increases d. Demand remains constant and supply increases

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Answers (1)

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Yadira Hood · Answer 1

c. demand decreases and supply increases

Explanation:

Equilibrium level of output refers to that level of output at which demand equals supply.

If demand decreases, the demand curve will experience a leftward shift. When supply increases, the supply curve shifts to the right. This results into suppliers supplying more and customers demanding lesser.

This will lead to a decrease in equilibrium price but in such a case, the effect on equilibrium quantity cannot be determined i. e the output would be indeterminate.