If the supply of a product decreases by more than the demand increases:

Question

Quizplus · Accepted Answer

If the supply of a product decreases by more than the demand increases, it means that the market is facing a shortage of that product. In this situation, suppliers will be able to charge a higher price for the limited quantity of the product, resulting in a rise in price. At the same time, consumers will buy less of the product due to the higher price, resulting in a fall in the quantity traded. Therefore, option A correctly describes the likely outcome in this scenario.

If the Supply of a Product Decreases by More Than