Final answer:
When the supply curve decreases and demand stays constant, the equilibrium price increases and the equilibrium quantity decreases. This is a fundamental principle of how markets adjust to changes in supply and demand, affecting the product and labor markets similarly.
Step-by-step explanation:
If the supply curve decreases while the demand curve is held constant, the result in terms of the new equilibrium price and quantity is an increase in equilibrium price and a decrease in equilibrium quantity. This is because when supply decreases, there are fewer goods available for sale, which, if demand is unchanged, leads to consumers being willing to pay a higher price for the available goods. Hence, the equilibrium price rises. Simultaneously, since there is less of the product available, the equilibrium quantity exchanged in the market falls.
This concept is applicable whether we are discussing the product market or the labor market. When considering various supply and demand scenarios, we know that an increase in demand leads to a higher equilibrium price and quantity, while a decrease in demand leads to a lower equilibrium price and quantity. An increase in supply would typically mean a lower equilibrium price but a higher equilibrium quantity. Conversely, a decrease in supply results in a higher equilibrium price and a lower equilibrium quantity.