An increase in the demand for a commodity accompanied by a decrease in its supply will result in a(n):

Question

Quizplus · Accepted Answer

An increase in demand will put upward pressure on price, while a decrease in supply will also put upward pressure on price. Therefore, the price will increase. The effect on quantity is uncertain and will depend on the magnitude of the changes in demand and supply. The quantity can increase if the increase in demand is relatively small compared to the decrease in supply or decrease if the decrease in supply is relatively large compared to the increase in demand.

An Increase in the Demand for a Commodity Accompanied by a Decrease