Question

If the supply decreases in the market for sweet rolls, what do you expect to happen to equilibrium quantity (Qe) and equilibrium price (Pe)?

a. Qe decreases; Pe increases.
b. Qe decreases: Pe decreases
c. Qe increases; Pe decreases
d. Qe increases; Pe increases

Answer 1

The correct answer is the option A: Qe decreases; Pe increases.

Step-by-step explanation:

To begin with, the situation in where the supply of a certain product decreases due to the decrease in its production will implicate that the equilibrium in the market will be changed, so what will happen is that the the supply curve will shift to the left and the price will increase because now there is less of the good in the market and its value is higher because of that and with that the quantity will decrease as well because the price has risen.