Question

With respect to the market clearing price and the equilibrium quantity for good X, an increase in the demand for and a decrease in supply of the good definitely will:_________.

a. increase the market clearing price of good X but lower the equilibrium quantity of X.
b. increase the market clearing price of good X but have an uncertain impact on the equilibrium quantity of X.
c. increase the market clearing price and the equilibrium quantity of good X.
d. decrease the market clearing price and the equilibrium quantity of good

Answer 1

b. increase the market clearing price of good X but have an uncertain impact on the equilibrium quantity of X.

Step-by-step explanation:

With respect to the market clearing price and the equilibrium quantity for good X, an increase in the demand for and a decrease in supply of the good definitely will increase the market clearing price of good X but have an uncertain impact on the equilibrium quantity of X.

Hence, an increase in the demand for goods with a decrease in its supply would make the selling price higher, thus affecting the equilibrium quantity of the goods.

Answer 2

Option A

Step-by-step explanation:

With respect to the market clearing price and the equilibrium quantity for good X, an increase in the demand for and a decrease in supply of the good definitely will increase the market clearing price of good X but have an uncertain impact on the equilibrium quantity of X.