-If demand for a good is represented by curve D' in Figure 5-10,then a decrease in supply of the good will cause
A)both the equilibrium price and revenue to rise
B)both the equilibrium price and revenue to fall
C)the equilibrium price to rise,but revenue to fall
D)the equilibrium price to fall,but revenue to rise
E)neither the equilibrium price nor revenue to change

Question

-If demand for a good is represented by curve D' in Figure 5-10,then a decrease in supply of the good will cause
A)both the equilibrium price and revenue to rise 
B)both the equilibrium price and revenue to fall 
C)the equilibrium price to rise,but revenue to fall 
D)the equilibrium price to fall,but revenue to rise 
E)neither the equilibrium price nor revenue to change

Quizplus · Accepted Answer

A decrease in supply leads to a higher equilibrium price. If demand is inelastic, total revenue will rise as the price increases.

-If Demand for a Good Is Represented by Curve D