Figure 4.7
-If demand increases and supply decreases in Figure 4.7,then the equilibrium

Question

Quizplus · Accepted Answer

If demand increases and supply decreases, it means that there are now more buyers who want to purchase the same amount of goods that there are fewer sellers who are willing to sell at the same price. This leads to a shortage in the market, which drives up the equilibrium price to a new higher point. As a result, the quantity traded in the market will rise only minimally or remain unchanged. Therefore, the correct answer is A, the price rises.

Figure 4.7 -If Demand Increases and Supply Decreases in Figure 4.7,then the 4.7,then