The correct option is It decreases..
Explanation
In a perfectly competitive market, the equilibrium price and quantity are determined by the intersection of the market demand curve and the market supply curve. Shifts in these curves alter the equilibrium position. A leftward shift in demand indicates a decrease in demand, while a rightward shift in supply indicates an increase in supply.
Analysis of Simultaneous Shifts:
- Leftward Shift in Demand: When the demand curve shifts to the left, it implies that at any given price, consumers demand a lower quantity. Ceteris paribus (holding supply constant), this creates excess supply at the original price, exerting downward pressure on the equilibrium price.
- Rightward Shift in Supply: When the supply curve shifts to the right, it implies that producers are willing to supply a higher quantity at any given price. Ceteris paribus (holding demand constant), this creates excess supply at the original price, also exerting downward pressure on the equilibrium price.
- Combined Impact: Since both the decrease in demand and the increase in supply independently cause the price to fall, their simultaneous occurrence reinforces this effect. Consequently, the equilibrium price will certainly decrease.
Note: While the direction of the price change is certain (decrease), the impact on the equilibrium quantity is indeterminate without knowing the relative magnitudes of the shifts (demand pulls quantity down, supply pushes quantity up).
Key Takeaway:
When demand decreases (shifts left) and supply increases (shifts right) simultaneously, both forces work together to lower the market price, making the price decrease certain regardless of the magnitude of the shifts.