The correct answer is Option 3: : Statement 1 is true and Statement 2 is false
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Statement 1: "When decrease in demand is equal to increase in supply, price falls."
- This is true because a decrease in demand puts downward pressure on price, and an increase in supply further adds to this effect by increasing availability.
- Since both forces work in the same direction (reducing price), the price definitely falls.
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Statement 2: "When decrease in demand is equal to increase in supply, quantity falls."
- This is false because while a decrease in demand reduces quantity, an increase in supply raises quantity.
- Since both shifts are equal, the net effect on quantity is uncertain, and in many cases, quantity remains constant.
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