Decrease in Supply
Definition
A decrease in supply refers to a situation where producers are able and willing to offer less of a product at each price level. This can be caused by factors such as higher production costs, scarcity of resources, or natural disasters affecting production.
Analogy
Imagine you're at an ice cream shop and suddenly half of their ice cream machines break down. There is now a decrease in supply because there are fewer flavors available for customers to choose from.
Related terms
Shift in Supply Curve: A shift in the supply curve occurs when there is a change in any factor other than price that affects the quantity supplied at each price level.
Inelastic Supply: Inelastic supply means that even with changes in price, the quantity supplied does not change significantly.
Shortage: A shortage occurs when the quantity demanded exceeds the quantity supplied at a given price.
"Decrease in Supply" appears in:
Subjects (1)
Study guides (1)
Practice Questions (2)
- Which of the following represents a decrease in supply?
- What happens to the equilibrium price and quantity in a market when there is a decrease in supply?
Resources
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