When supply decreases and demand increases, what happens to the price of a good?
(1 point)
O it increases
O it stays the same
O it decreases
• it is unaffected
It increases.
yes increases
That's correct. When supply decreases and demand increases, the scarcity of the good leads to an increase in its price.
When supply decreases and demand increases, the price of a good typically increases.
When supply decreases and demand increases, the price of a good typically increases. This is because the change in supply and demand creates a situation where there is more demand than there is supply available to meet it. As a result, sellers have the advantage, and they can increase the price of the good to balance out the limited supply with the high demand.
To understand this concept, you can visualize the relationship between supply and demand on a graph. The graph would have price on the y-axis and quantity on the x-axis. When the supply curve shifts to the left due to a decrease in supply, and the demand curve shifts to the right due to an increase in demand, the intersection point moves to a higher price level. This indicates the increase in price that occurs when supply decreases and demand increases.
Therefore, the correct answer is "it increases."