Question

There will be a higher equilibrium price and lower quantity if _____.

Answer 1

Reduction in supply

Step-by-step explanation:

Equilibrium is when demand matches supply. At the equilibrium price, the market has no excess demand or supply or demand. Changes in either supply or demand affects the equilibrium price and quantity.

A reduction in supply while demand remains constant results in buyers competing for few products in the market. A scarcity will emerge as the supply cannot satisfy demand. The supply curve shifts outwards or to the right creating a new equilibrium point. The new price will at a higher point in the graph, and the quantity will decrease.