The correct answer is A. decrease, quantity demanded will decrease and quantity supplied will increase.
In a competitive market, the equilibrium price is the price at which the quantity demanded is equal to the quantity supplied. If the price is initially above the equilibrium level, then there will be a surplus of goods. This is because at the higher price, consumers are willing to buy less than producers are willing to sell. As a result, producers will lower their prices in order to sell more goods, and consumers will buy more goods at the lower price. This process will continue until the price reaches the equilibrium level.
When the price decreases, quantity demanded will decrease. This is because consumers are willing to buy less of a good when the price is higher. When the price decreases, consumers have more money to spend on other goods, so they will buy less of the good in question.
When the price decreases, quantity supplied will increase. This is because producers are willing to sell more of a good when the price is higher. When the price decreases, producers make less profit on each unit sold, so they will produce more units in order to make up for the lower profit margin.
Therefore, when the price is initially above the equilibrium level, we can predict that price will decrease, quantity demanded will decrease and quantity supplied will increase.