Question

If the market is initially in equilibrium, which of the following would create a new equilibrium at point H?:

a) An increase in supply
b) A decrease in demand
c) A decrease in supply
d) An increase in demand

Answer 1

A decrease in supply would create a new equilibrium at point H.

Step-by-step explanation:

In economics, if the market is initially in equilibrium, a decrease in supply would create a new equilibrium at point H.

An increase in supply would shift the supply curve to the right, resulting in a new equilibrium with a lower price and a higher quantity.

In contrast, a decrease in supply would shift the supply curve to the left, leading to a new equilibrium with a higher price and a lower quantity.