Question

The market for a good was in equilibrium. A change occurred which resulted in a new equilibrium with a higher price for the good and a lower quantity traded. What change would have caused this?
A) The demand curve moved to the left.
B) The demand curve moved to the right.
C) The supply curve moved to the left.
D) The supply curve moved to the right

Answer 1

Answer:

C) The supply curve moved to the left.

Explanation:

A supply curve shift to the left due to a reduction in the quantity supplied to markets. When the market is at equilibrium, a decrease in supply will likely to create a shortage. Buyers will compete to buy the few available items at the price that suppliers will demand. Suppliers will take advantage of the " increase " in demand to raise prices.

A reduced supply means that the quantity available in the market decreases. At equilibrium, the quantity supplied matches demand, but when supply decreases, the quantity supplied also decreases.