Question

A decrease in demand, with supply constant, results in a(n)

increase in equilibrium price and a decrease in equilibrium quantity
decrease in equilibrium price and a decrease in equilibrium quantity
increase in equilibrium price and an increase in equilibrium quantity
increase in equilibrium price and an ambiguous effect on equilibrium quantity
decrease in supply

Answer 1

The correct answer is decrease in equilibrium price and a decrease in equilibrium quantity.

Step-by-step explanation:

The supply being constant, a decrease in demand will cause the demand curve to shift to the left while the supply curve will remain the same.

The new demand curve will intersect the supply curve at a lower point. This rightward shift in the demand curve will cause both the equilibrium quantity as well as the equilibrium price to fall.