Upper A decrease
in the supply of
chewing gum
will ________ the equilibrium price and _________ the equilibrium quantity.
Part 2
A.increase comma decrease
increase comma decrease
B.increase comma increase
increase comma increase
C.increase comma maintain
increase comma maintain
D.decrease comma increase
decrease comma increase
D. decrease, increase
A decrease in the supply of chewing gum will decrease the equilibrium price and decrease the equilibrium quantity.
To determine the effects of a decrease in the supply of chewing gum on the equilibrium price and quantity, we can analyze the supply and demand relationship.
In general, when the supply decreases, it means that producers are supplying less of the product at each price level. This creates a shortage in the market, as the quantity demanded by consumers exceeds the quantity supplied by producers.
Please note that the equilibrium price and quantity will depend on the relative magnitude of the changes in supply and demand. In this case, we are assuming that the demand for chewing gum remains constant.
Given this information, let's examine the answer choices:
A. Increase, decrease: This option suggests that the equilibrium price will increase, and the equilibrium quantity will decrease. This is consistent with the reasoning that a decrease in supply leads to a higher price and a lower quantity.
B. Increase, increase: This option implies that both the equilibrium price and quantity will increase. This contradicts our initial analysis, as a decrease in supply typically results in a lower quantity supplied.
C. Increase, maintain: This option suggests that the equilibrium price will increase, but the equilibrium quantity will remain the same, which is not consistent with the analysis above.
D. Decrease, increase: This option implies that the equilibrium price will decrease, while the equilibrium quantity will increase. Again, this contradicts our analysis, as a decrease in supply typically leads to an increase in price.
Based on the above analysis, option A, which states that a decrease in supply of chewing gum will result in an increase in the equilibrium price and a decrease in the equilibrium quantity, appears to be the correct answer.