If the supply of a product decreases while demand remains unchanged, the new market equilibrium normally has:
Correct answer: B. A higher price and a lower quantity
- A. A lower price and a higher quantity
- B. A higher price and a lower quantity
- C. A higher price and a higher quantity
- D. An unchanged price and a lower quantity
Explanation
A decrease in supply shifts the supply curve to the left. With demand unchanged, buyers compete for fewer units, causing the equilibrium price to rise and the equilibrium quantity to fall.
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About Microeconomics
Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
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