New Equilibrium from Demand Decrease and Supply Increase

Steps:

• Locate original equilibrium at intersection of initial demand (D1) and supply (S1) curves.
• Shift demand left to D2 due to decrease, reducing quantity demanded at each price.
• Shift supply right to S2 due to increase, increasing quantity supplied at each price.
• Find new equilibrium at D2 and S2 intersection, yielding lower price and higher quantity.

Why B is correct:

• B marks the intersection of shifted D2 (left) and S2 (right), where quantity demanded equals quantity supplied per market equilibrium definition.

Why the others are wrong:

• A: Original equilibrium before shifts, with higher price and lower quantity.
• C: Intersection of original D1 and new S2, ignoring demand shift.
• D: Intersection of new D2 and original S1, ignoring supply shift.

Final answer: B