If there is a simultaneous shift in demand (leftward) and supply (rightward), then which of the following is true?
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → Price will decrease but quantity may increase, decrease or remain unchanged
The price and the quantity of a good settle where the demand curve meets the supply curve; this point is the market equilibrium. A leftward shift of demand means that buyers want less at every price, for example because a cheaper substitute has appeared. A rightward shift of supply means that sellers offer more at every price, say because a better technology has lowered the cost of production.
Take the two shifts one at a time:
Only demand shifts left: at the old price sellers offer more than buyers want, so there is excess supply; the price falls, and the equilibrium quantity falls.
Only supply shifts right: at the old price, again, more is offered than demanded; the price falls, buyers take more at the lower price, and the equilibrium quantity rises.
When both shifts happen together, their effects on price point the same way, so the price falls for certain. Their effects on quantity pull in opposite directions, so the quantity can rise, fall or stay the same, depending on which shift is larger; if the two shifts are of the same size, the quantity is unchanged.
Why the other options are incorrect
Option (1) Price will increase but quantity may increase or decrease — Incorrect. Neither shift can raise the price; price rises only when demand shifts right or supply shifts left.
Option (2) Price will remain same but quantity may increase, decrease or remain constant — Incorrect. Since both shifts lower the price, it cannot stay the same. An unchanged price with an uncertain quantity does not arise in any of the four cases of simultaneous shifts.
Option (4) Price may increase, decrease or remain constant quantity decrease — Incorrect. This reverses the two results: here price is the certain one and quantity the uncertain one. An uncertain price with a definite fall in quantity is the case of both curves shifting left.
NCERT (2025-26): “Simultaneous Shifts of Demand and Supply What happens when both demand and supply curves shift simultaneously? The simultaneous shifts can happen in four possible ways: (i) Both supply and demand curves shift rightwards. (ii) Both supply and demand curves shift leftwards. (iii) Supply curve shifts leftward and demand curve shifts rightward. (iv) Supply curve shifts rightward and demand curve shifts leftward.… …In the first two cases which are shown in the first two rows of the table, the impact on equilibrium quantity is unambiguous but the equilibrium price may change, if at all, in either direction depending on the magnitudes of shifts. In the next two cases, shown in the last two rows of the table, the effect on price is unambiguous whereas effect on quantity depends on the magnitude of shifts in the two curves. …… equilibrium quantity remains the same whereas price decreases due to a leftward shift in demand curve and a rightward shift in supply curve.”
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