Suppose that an increase in production costs decreases the supply of wheat, such that less wheat is supplied at each price level. The new equilibrium quantity (after the decrease in supply) is

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Ellis Ferrell

14 August, 21:39

Suppose that an increase in production costs decreases the supply of wheat, such that less wheat is supplied at each price level. The new equilibrium quantity (after the decrease in supply) is

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Sumo · Answer 1

If the demand will remain the same for the certain period of time then the supply decreases. The price will spike because the product has the less demand. As supply increases, prices will move lower because the product is readily available.