Which of the following statements is correct? A. If supply declines and demand remains constant equilibrium price will fall. B. If demand increases and supply remain constant equilibrium price will fall. C. If supply declines and demand remains constant, equilibrium price will rise. D. If supply increases and demand remain constant equilibrium price will rise.

Question

Which of the following statements is correct? A. If supply declines and demand remains constant equilibrium price will fall. B. If demand increases and supply remain constant equilibrium price will fall. C. If supply declines and demand remains constant, equilibrium price will rise. D. If supply increases and demand remain constant equilibrium price will rise.

Answer 1

The correct statement is:C. If supply declines and demand remains constant, equilibrium price will rise.Explanation: When the supply of a good or service decreases while the demand remains constant, the equilibrium price will increase. This is because the lower supply creates a shortage at the original price, leading to an increase in the price to reach a new equilibrium where supply equals demand.

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