Related to the Economics in Practice on p. 77: If the supply of generators decreased and the equilibrium price of generators decreases, the demand for generators ________ and total revenue from the sale of generators ________.
A) decreased; will decrease
B) increased; may increase, decrease, or stay the same
C) may have increased, decreased, or stayed the same; will decrease
D) may have increased; decreased, or stayed the same; may increase, decrease, or stay the same

Question

Quizplus · Accepted Answer

If the supply of generators decreased, it means that there are fewer generators available in the market. This would lead to a decrease in the quantity supplied of generators at any given price level. As a result, the supply curve shifts to the left. At the same time, the demand for generators may or may not change. However, the decrease in the quantity supplied would lead to an increase in the equilibrium price of generators. This increase in the price would cause a decrease in the quantity demanded of generators. Hence, if the demand for generators stays the same or decreases, the total revenue from the sale of generators will also decrease.

Related to the Economics in Practice on P