The product is a normal product.

-What is the effect of a decrease in the supply of a product?
A)It will cause an increase in both the price and in the quantity traded.
B)It will cause an increase in the price but a decrease in the quantity traded.
C)It will cause a decrease in both the price and in the quantity traded.
D)It will cause a decrease in the price but an increase in the quantity traded.

Question

The product is a normal product.
 
-What is the effect of a decrease in the supply of a product?
A)It will cause an increase in both the price and in the quantity traded. 
B)It will cause an increase in the price but a decrease in the quantity traded. 
C)It will cause a decrease in both the price and in the quantity traded. 
D)It will cause a decrease in the price but an increase in the quantity traded.

Quizplus · Accepted Answer

A decrease in supply means that there is less of the product available in the market. This creates a situation where demand exceeds supply, causing an increase in price. However, since there is less of the product available, consumers will be less willing to buy it at the higher price, resulting in a decrease in the quantity traded. Therefore, the correct answer is B - an increase in price but a decrease in the quantity traded.

The Product Is a Normal Product