An increase in the demand for lobster due to changes in consumer tastes, accompanied by a decrease in the supply of lobster as a result bad weather reducing the number of fishermen trapping lobster, will result in
A)a decrease in the equilibrium quantity of lobster and no change in the equilibrium price.
B)an increase in the equilibrium price of lobster and no change in the equilibrium quantity.
C)an increase in the equilibrium price of lobster; the equilibrium quantity may increase or decrease.
D)a decrease in the equilibrium quantity of lobster; the equilibrium price may increase or decrease.

Question

Quizplus · Accepted Answer

An increase in demand raises the price and quantity, while a decrease in supply raises the price but lowers the quantity. The equilibrium price will increase, but the change in equilibrium quantity is uncertain as it depends on the relative magnitudes of the shifts in demand and supply.

An Increase in the Demand for Lobster Due to Changes