Question

If the equilibrium price of a good increases and the equilibrium quantity of the good decreases, we can conclude that __________.

Answer 1

Answer: Supply decreases and the supply curve has shifted upwards.

Explanation:

Equilibrium price is the place where the supply and demand curves meet. It is the balance point above the point creates surplus and below the point creates shortages.Surplus occurs when the prices are lowered to increase the sales. When there is a shortage the prices will increase to make benefit out of the situation and meet high demand.

When the supply and demand curves shift upwards it affects the price and quantity. The equilibrium price of the product will increase and the quantity falls.