How does a shift in demand typically affect equilibrium price?

A shift in demand can significantly influence the equilibrium price, depending on the direction of the shift. When demand increases, consumers are willing to buy more of a good or service at every given price, which generally leads to a higher equilibrium price as suppliers respond to this increased demand by raising prices.

Conversely, if demand decreases, consumers are less inclined to purchase the same quantity at previous price levels, resulting in downward pressure on equilibrium prices as sellers attempt to attract buyers.

Therefore, the correct answer reflects the fact that depending on whether the demand shifts to the right (increase) or to the left (decrease), the equilibrium price can indeed either increase or decrease. This demonstrates the dynamic nature of market equilibrium where both demand and supply interact to determine prices.