Based on the above scenarios, the effect will be as follows:
- Equilibrium quantity will drop.
- Equilibrium price will be indeterminate.
What happens when both supply and demand decrease at the same time?
- Equilibrium quantity will fall as less people are demanding the good and there is less production.
- Equilibrium price might remain the same if the effect from the decrease in supply matches the effect from the decrease in demand.
Demand will fall as a result of the report accusing chocolate of flu and the supply will drop because hiring people has become harder.
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