Suppose Supply Decreases, but There Is No Change in Demand

question 103

Multiple Choice

Suppose supply decreases, but there is no change in demand. As the market reaches its new equilibrium:

• A)excess demand will lead the price to rise.
• B)excess supply will lead the price to rise.
• C)excess demand will lead the price to fall.
• D)excess supply will lead the price to fall.

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Definitions:

Cohort Effect

Similarities in behavior among a group of peers that stem from the fact that group members are approximately the same age.

Cultural Heritage

The traditions, languages, knowledge, and artifacts passed down through generations in a particular group or society.

John Locke

A 17th-century English philosopher known for his work in political philosophy and epistemology, who argued that the mind is a tabula rasa at birth.

Tabula Rasa

A hypothesis positing that people are born with minds like blank slates, and all understanding is derived from experiences or sensory input.