Question

A leftward shift of the supply curve for widgets, ceteris paribus will cause equilibrum price to

A. Rise and equilibrium quantity to rise


B. fall and equilibrium quantity to fall


C. Rise and equilibrium quantity to fall


D. Fall and equilibrium quantity to remain unchanged

Answer 1

Answer: c. Rise and equilibrium quantity to fall

Explanation:

The supply curve shows the relationship that exists between the price of a product and the quantity that's been sold by the consumer.

A leftward shift of the supply curve for widgets implies that there's a reduction in the quantity supplied. Since there's a reduction, there'll be few widgets which will lead to increase in equilibrium price and fall in the quantity.