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JAMB Economics 1994 Question 21

Question 21

Price Determination

Above the equilibrium point, a further rise in price tends to

  1. A.increase demand and restrict supply
  2. B.restrict demand and restrict supply
  3. C.increase demand and decrease supply
  4. D.decrease demand and increase supply
Show the answer and explanation

Answer: D (decrease demand and increase supply)

Explanation

A higher price makes buyers take less and sellers offer more.