Question

There are simultaneous changes in the demand for and supply of tablet​ devices, with the consequences being an unambiguous decrease in the equilibrium quantity of these devices but no change in the market clearing price. What changes in the demand for and supply of tablet devices could have generated these​ outcomes?
a. Demand increases and supply decreases.
b. Demand decreases and supply increases.
c. Demand decreases and supply decreases.
d. Demand increases and supply increases.

Answer 1

Answer: c. Demand decreases and supply decreases.

Explanation:

When demand for tablets decrease, the demand curve shifts to the right. The price and quantity declines. At the same time, when supply also falls, the supply curve shifts to the left leading to an increase in price and a fall in quantity.

Since, decrease in demand and supply have opposite effect on the price there is no change in the price of tablets.

Both the forces work towards reducing quantity to quantity will fall unambiguously.

Thus, the correct option is c, Demand decreases and supply decreases.