Which of the following statement/statements are true?
Statement 1: When increase in demand is less than decrease in supply, leftward shift in demand will be less than rightward shift in supply.
Statement 2: When increase in demand is less than decrease in supply, quantity falls.

Statement 2 is true and Statement 1 is false.

The correct answer is Option 4: Statement 2 is true and Statement 1 is false.

Statement 1: False

• Increase in demand shifts the demand curve to the right.
• Decrease in supply shifts the supply curve to the left.
• If the increase in demand is less than the decrease in supply, then the rightward shift in demand will be smaller than the leftward shift in supply.
• The statement incorrectly says leftward shift in demand as demand does not shift left; it shifts rightward when it increases.

Statement 2: True

• Since the supply decreases more than demand increases, the overall quantity in the market falls.
• Supply contraction limits the availability of goods, reducing equilibrium quantity.
• Therefore, the equilibrium quantity decreases, making this statement correct.