When there is a decrease in supply, all else held equal,
A)equilibrium price falls, demand increases, and equilibrium quantity increases.
B)equilibrium price falls, demand does not change, and equilibrium quantity increases.
C)equilibrium price rises, quantity demanded decreases, and equilibrium quantity decreases.
D)equilibrium price falls, quantity demanded decreases, and equilibrium quantity decreases.
E)equilibrium price rises, demand does not change, and equilibrium quantity increases.

Question

Quizplus · Accepted Answer

When there is a decrease in supply, the equilibrium price rises because the goods become scarcer, quantity demanded decreases as a result of the higher price, and the equilibrium quantity decreases because there is less supply available.

When There Is a Decrease in Supply, All Else Held