If the cost of doing business increases, the result is _____ equilibrium price and _____ equilibrium quantity.

Question

Quizplus · Accepted Answer

When the cost of doing business increases, it typically leads to a decrease in supply because producers are less willing or able to supply the same quantity at previous prices. This decrease in supply, assuming demand remains constant, results in a higher equilibrium price (as consumers are willing to pay more for the reduced available quantity) and a lower equilibrium quantity (as less of the product is available at the higher price).

If the Cost of Doing Business Increases, the Result Is