When demand increases and supply decreases,

CA Foundation · Business Economics · MTP · April 2025
When demand increases and supply decreases,
(A) A. the equilibrium price and quantity both rise
(B) B. the equilibrium price and quantity both fall
(C) C. the equilibrium price rises but nothing certain can be said about the change in equilibrium quantity.
(D) D. the equilibrium quantity rises but nothing certain can be said about the change in equilibrium price.

Suggested Answer and Working Notes:

Correct Answer: Option (C)

C. the equilibrium price rises but nothing certain can be said about the change in equilibrium quantity.

Topics: Price Determination in Different Markets

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