Select the phrase that correctly completes the following statement."A decrease in the number of manufacturers caused a decrease in the supply of sailboats.As a result,
A)the price of sailboats increased and the demand for sailboats decreased."
B)the equilibrium quantity of sailboats increased."
C)the price of sailboats increased and the quantity demanded of sailboats decreased."
D)the price of sailboats increased.The higher price caused the supply of sailboats to increase."

Question

Quizplus · Accepted Answer

According to the law of supply, a decrease in the number of manufacturers would lead to a decrease in the supply of sailboats. This would cause the price of sailboats to increase (due to the shift in the supply curve). As a result, the quantity demanded of sailboats would decrease (due to the law of demand). Therefore, the correct phrase that completes the statement is "the price of sailboats increased and the quantity demanded of sailboats decreased." Choice A is incorrect because it suggests that the demand for sailboats decreased, which may not necessarily be true. Choice B is incorrect because it suggests that the equilibrium quantity of sailboats increased, which is not consistent with the decrease in supply. Choice D is incorrect because it suggests that the higher price caused the supply of sailboats to increase, which is not logical.

Select the Phrase That Correctly Completes the Following Statement