LearningCausesv1

A supply drop can raise market price

With other conditions held constant, scarcity changes the equilibrium.

Output

Lower traded quantity and a higher equilibrium price

Input

Stable demand and a sudden reduction in supply

Input

Stable demand and a sudden reduction in supply

Lower traded quantity and a higher equilibrium price

Relationship

The supply curve shifts left. Buyers compete for fewer units until quantity demanded and quantity supplied meet at a higher price.