Practice Quiz

CLEP Principles of Macroeconomics Exam Prep

Category - Macroeconomics

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What happens if the demand for oranges increases, but the supply of oranges decreases?
  1. The price and quantity will both increase
  2. The price and quantity will both decrease
  3. The price will increase, but the quantity will decrease
  4. The price will increase, but it cannot be determined what will happen to the quantity
Explanation
Answer - D - If the demand for oranges increase, but the supply of oranges decreases, the price will decrease, but it cannot actually be determined what will happen to the quantity.

Key Takeaway: Although it may seem like the quantity should decrease, it is actually impossible to know how much the supply is decreasing and the degree of the changing supply and/or demand.
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