Use the following diagram to answer the following questions.

-Refer to Tea. Suppose the supply for tea decreases from S₁ to S₂. The new equilibrium price and quantity are:

Question

Use the following diagram to answer the following questions.
 
-Refer to Tea. Suppose the supply for tea decreases from S₁ to S₂. The new equilibrium price and quantity are:

Quizplus · Accepted Answer

When the supply for tea decreases from S₁ to S₂, the demand curve remains constant. As a result, the new equilibrium point is at the intersection of the new supply curve (S₂) and the demand curve. This point is at a higher price (P₂) and a lower quantity (Q₂). Therefore, choice C is the correct answer.

Use the Following Diagram to Answer the Following Questions