Question

A decrease in the supply of a good can be expected to cause ____ in the equilibrium price of the good and ____ in the equilibrium quantity of the good bought and sold

Answer 1

Increase, Decrease

Step-by-step explanation:

A decrease in the supply results in many buyers competing for very few goods. If the demand is constant, the quantity supplied and price have an indirect relationship. A decrease in the volume of supplied results in an increase in price. Many buyers will be competing for a few products causing the equilibrium price to increase.

A decrease in supply will cause the quantity available for buyers to buy to decline. Consequently, the volume purchased will be fewer. Equilibrium quantity will, therefore, decrease.