If demand decreases and supply also decreases, what is the expected change in equilibrium quantity and price?

When both demand and supply decrease, it is important to understand how these shifts in the market interact with one another to affect equilibrium quantity and price.

When demand decreases, this typically leads to a lower equilibrium price as consumers are willing to buy less at each price level. Similarly, a decrease in supply suggests that sellers are producing and offering less in the market, which tends to increase prices if demand remains unchanged.

In this specific scenario, both factors are at play: a reduction in quantity demanded due to a decrease in demand and also a reduction in quantity supplied due to a decrease in supply. The overall outcome on the equilibrium quantity would be a decline, as both the adverse shifts in demand and supply reduce the overall amount of goods exchanged in the market.

When looking at price, the outcome is less clear-cut. Since demand is falling (which suggests prices would decrease), and supply is also falling (which could push prices up), the net effect on price is indeterminate—it could either rise or fall depending on the relative magnitude of the shifts in demand and supply.

Thus, the conclusion that equilibrium quantity will fall while price may rise or fall aligns with the dynamics of how shifts in both demand and supply affect market equilibria.