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When demand decreases and supply increases simultaneously, which statement is correct?
AEquilibrium quantity falls, but the price change is uncertain
BEquilibrium price falls, but the quantity change is uncertain
CBoth equilibrium price and quantity are certain to fall
DBoth equilibrium price and quantity are certain to rise
Answer & Solution
Correct answer: B. Equilibrium price falls, but the quantity change is uncertain
1. A leftward demand shift pushes price down; a rightward supply shift also pushes price down.
2. The two forces reinforce each other on price, so price falls for certain.
3. They act oppositely on quantity, so the quantity outcome cannot be predicted; that rules out option A.
4. Price falls but quantity uncertain means option B is correct.
_Source: ICAI BoS CA Foundation Paper 4 Business Economics, Ch 4 Unit II "Determination of Prices", p.7_
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