A decrease in supply, holding demand constant, will cause: – Q/A (Question and Answer)

Answer:

Higher prices and a smaller quantity sold

Explanation

A decrease in supply, holding demand constant, will cause an increase in price.

A decrease in the quantity of the good supplied to the market results in an increase in price and a decrease in quantity demanded. The law of supply and demand states that when the quantity of a good supplied to the market decreases, the price of the good increases. The law of demand states that when the price of a good increases, the quantity demanded decreases.

A decrease in the price of the good will lead to an increase in demand for the good. This is because as the price of the good decreases, consumers will want to purchase more of the good as it becomes more affordable.

There are a few potential reasons for a decrease in the revenue of the suppliers of the good. One possibility is that the good is no longer in demand and consumers are buying less of it. This could be due to a change in preferences or a decline in the overall economy. Another possibility is that the suppliers have faced an increase in costs, such as the cost of raw materials, which has eating into their profits. Finally, it is also possible that new competitors have entered the market and are selling the good for less, putting pressure on the existing suppliers to lower their prices.

A decrease in the production of the good will result in an increase in the price of the good in the market. This is because the demand for the good will exceed the available supply, leading to competition among buyers and an eventual increase in price.

A decrease in the employment associated with the production of the good may lead to an increase in the price of the good. This is because there is a decrease in the supply of the good, and the law of supply and demand dictates that when the supply of a good decreases, the price of the good will increase.

Conclusion

A decrease in supply, holding demand constant, will cause an increase in price and a decrease in quantity demanded.