What happens to price when supply and demand both decrease?A.There is no change.B.Price increases.C.The change is indeterminate.D.Price decreases.SUBMITarrow_backPREVIOUS

The effect on price when both supply and demand decrease can be indeterminate and depends on the magnitude of the decrease in both factors.

Here's a step by step explanation:

1. If demand decreases, less of a product or service is desired at any given price. This decrease in demand while supply remains constant generally leads to a lower equilibrium price.

2. If supply decreases, less of a product or service is available at any given price. This decrease in supply while demand remains constant generally leads to a higher equilibrium price.

3. If both supply and demand decrease simultaneously, the effect on price will depend on the magnitude of the shifts.

   • If the decrease in demand is larger than the decrease in supply, the price will likely decrease.

   • If the decrease in supply is larger than the decrease in demand, the price will likely increase.

   • If the decrease in supply and demand are equal, the price will remain the same.

So, the answer is C. The change is indeterminate. It depends on the relative shifts in the supply and demand curves.