Question

Suppose good x is in equilibrium what will happen when increase in demand is less than decrease in supply

Answer 1

If the decrease in supply is more then increase in demand then the price of good x will definitely increase.

EXPLANATION-

• As stated above, there is more decrease in supply which means that supply is less.
• Also, there is less increase in demand which means there is a demand. Although demand is not much increasing still it is there.

This means the overall situation is like more demand but less supply. hence it will create a scarcity of good x in the market. The competition to buy it will increase and hence it's rate will also increase.