Which of the following statement is TRUE of the effect of changes in demand and supply on price?
A decrease in supply will lead to fall in price and a fall in the quantity bought and sold
An increase in demand will lead to a fall in price and quantity bought and sold
A decrease in demand will lead to a rise in price and in the quantity bought and sold
An increase in supply will lead to a fall price and a rise in the quantity bought and sold
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Discussions (4)
I totally disagree,A/B is the correct answer and even the option did not even correct
D is the right ans. First of all, when there is an increase in price, more commodities are offered for sales, but when there is excess supply of the commodity in the market, as it is seen common in the market especially perishable goods that can not withstand a longer period of time, prices would drop as many of those goods really need to be sold and that result to increase in goods bought.
The answer is A. the law of supply states that 'the higher the price, the higher the quantity supplied'. Therfore the answer cannot be D.
I partially disagree with this. How could an increase in supply leads to fall in price. Looking at the demand curve alone an increase in apply always leads to increase in price. And what does law of supply even says. I'm sure the answer should be between A and B
