Answer :
A decrease in supply will cause the equilibrium price to rise; the
quantity demanded will decrease.
What Happens to the Equilibrium Price When Quantity of Supply & Demand Shifts Upward?
Price and quantity relationships are expressed by supply and demand curves. When supply equals demand, equilibrium exists.
Because revenues are a function of price and quantity, the shape of these curves and the equilibrium price have an impact on both small and large businesses.
Although a single business cannot influence the shape of these curves, the collective actions of businesses and consumers influence the supply and demand curves for various industries.
If the demand curve shifts downward, meaning demand decreases but supply holds steady, the equilibrium price and quantity both decrease.
The equilibrium price and quantity are affected by upward shifts in the supply and demand curves.
If the supply curve shifts upward, implying that supply falls but demand remains constant, the equilibrium price rises but the quantity falls.
Pump prices, for example, are likely to rise if gasoline supplies fall.
If the supply curve shifts downward, indicating an increase in supply, the equilibrium price falls and the quantity rises.
If refineries supply more gasoline, pump prices are likely to fall if demand does not rise in tandem.
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