Question

Suppose you are told that the equilibrium price of bananas has​ increased, while the equilibrium quantity of bananas has fallen. You are also told that either the demand changed or supply​ changed, but not both. Which of the following must have​ occurred?
a. demand decreased
b. supply increased
c. demand increased
d. supply decreased

Answer 1

Answer:

D. Supply decreased

Explanation:

When Supply of a product decreases the equilibrium price increases because at that point, demand of that commodity becomes more than the available quantity of the commodity. Also, a fall in the equilibrium quantity of a commodity in this case banana indicates that the supplier has reduced the amount of goods supplied at that particular point in time (supply decreased). It causes a relative scarcity of that product mostly when the demand for such commodity increases or maintain previous demand equilibrium numbers.