Last year there were 6 pizza shops in town. This year there are only 4. Other things being equal, the decrease in the number of suppliers will
A) cause the market supply curve to shift to the right.
B) increase the market demand for pizza.
C) cause a decrease in the quantity supplied at each price.
D) have no impact on market supply as long as the demand for pizza remains strong.

Question

Quizplus · Accepted Answer

The decrease in the number of suppliers will cause a decrease in the quantity supplied at each price. This is because with fewer pizza shops, there are fewer suppliers who are able and willing to sell pizzas at each price level. Therefore, the market supply curve will not shift to the right, and the market demand for pizza will also not be affected by the number of suppliers.

Last Year There Were 6 Pizza Shops in Town