Choose the correct pair.

C-3

The correct answer is Option 3: C-3

• Increase in demand shifts the demand curve rightward, leading to higher equilibrium quantity and price.
• Decrease in supply shifts the supply curve leftward, leading to lower equilibrium quantity and higher price.
• Since both shifts cause price to rise, the final equilibrium price must increase.
• However, because the increase in demand is exactly equal to the decrease in supply, the changes in quantity cancel each other out.
• This means the equilibrium quantity remains constant while the equilibrium price increases.

Other Options

 A-1 (Price decreases) → Incorrect (Price should increase, not decrease).

B-2 (Price increases, quantity increases) → Incorrect (Quantity will be constant).

D-4 (Price falls, quantity constant) → Incorrect (When the increase in demand is greater than the decrease in supply, the equilibrium price will rise, and the equilibrium quantity will also rise.).