Answer to Question #47697 in Economics of Enterprise for Sponga

Question

if demand shifts in by the same amount as supply shifts out, market price will ______ and equilibrium quantity will ______.

Answer 1

If demand shifts in by the same amount as supply shifts out, market price will decrease and equilibrium quantity will not change.
A demand decrease results from a change in any of the five demand determinants. A supply increase results from a change in any of the five supply determinants. By itself, a demand decrease results in a decrease in equilibrium quantity and a decrease in equilibrium price. By itself a supply increase results in An increase in equilibrium quantity and a decrease in equilibrium price. A simultaneous decrease in demand and increase in supply unquestionably generates a decrease in the price. However, the change in the quantity is indeterminant. It might decrease or increase depending on the magnitude of the demand and supply changes.