When supply falls and demand remains the same,equilibrium price _____ and equilibrium quantity ________.

Question

Quizplus · Accepted Answer

When supply falls and demand remains the same, the market is in a situation where the quantity demanded exceeds the quantity supplied, leading to a shortage. This scarcity will drive up prices, leading to a rise in the equilibrium price. However, as the quantity supplied is less than the original equilibrium quantity, the equilibrium quantity will fall. Hence, the correct answer is D.

When Supply Falls and Demand Remains the Same,equilibrium Price _____