Question

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

Answer 1

Answer:

Supply decreases

Explanation:

Equilibrium is a balanced scenario where demand matches supply. At equilibrium, both sellers and buyers are happy with the current price. The market has no excess demand or supply or demand.

A decrease in supply while demand stays constant results in many customers competing for the few products in the market. There will be scarcity because the supply cannot satisfy demand. The supply curve shifts outwards or to the right resulting in a new and higher equilibrium point. The price will increase while the quantity supplied declines.