A decrease in the supply of a good will

Question

Quizplus · Accepted Answer

A decrease in supply means there are fewer goods available to be bought and sold, which creates scarcity. As a result, buyers will compete with one another to purchase the limited supply, leading to an increase in price. This increase in price motivates suppliers to produce more of the good, which increases supply and stabilizes the price in the long run. Therefore, a decrease in supply will lift the price of the good.

A Decrease in the Supply of a Good Will