Question

What happens to the price and quantity of cheese sold if the demand for cheese increases and the supply of cheese decreases?

A. Price decreases; quantity doesn't change.
B. Price increases; quantity stays the same.
C. Price decreases; we do not know what happens to quantity.
D. Price decreases; quantity increases.
E. Price increases; we do not know what happens to quantity.

Answer 1

When the demand for cheese increases and the supply of cheese decreases, the price of cheese will increase and the quantity of cheese sold will decrease.

Step-by-step explanation:

When the demand for cheese increases and the supply of cheese decreases, the price of cheese will increase and the quantity of cheese sold will decrease.

With an increase in demand, consumers are willing to pay a higher price for cheese, resulting in an increase in price. On the other hand, a decrease in supply means there is less cheese available in the market, which leads to a decrease in the quantity of cheese sold.