[amp_mcq option1=”If demand increases and supply decreases, equilibrium price will rise” option2=”If supply increases and demand decreases, equilibrium price will fall” option3=”If demand decreases and supply increases, equilibrium price will rise” option4=”If supply declines and demand remains constant, equilibrium price will rise” correct=”option4″]<\/p>\n
The correct answer is D. If supply declines and demand remains constant, equilibrium price will rise.<\/p>\n
The law of demand states that, all other things being equal, the higher the price of a good, the less people will demand it. The law of supply states that, all other things being equal, the higher the price of a good, the more people will supply it.<\/p>\n
When supply declines, the equilibrium price will rise. This is because there is now less of the good available, so buyers are willing to pay more for it. When demand remains constant, the equilibrium price will not change. This is because the number of buyers is not affected by the change in supply.<\/p>\n
Therefore, the only statement that is incorrect is D. If supply declines and demand remains constant, equilibrium price will rise.<\/p>\n","protected":false},"excerpt":{"rendered":"
[amp_mcq option1=”If demand increases and supply decreases, equilibrium price will rise” option2=”If supply increases and demand decreases, equilibrium price will fall” option3=”If demand decreases and supply increases, equilibrium price will rise” option4=”If supply declines and demand remains constant, equilibrium price will rise” correct=”option4″]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12],"tags":[],"class_list":["post-43013","post","type-post","status-publish","format-standard","hentry","category-economics","no-featured-image-padding"],"yoast_head":"\n