If supply curve shifts to the left, what will be change in equilibrium?
Answer & explanation
Correct answer: option 3
The correct answer is option 3: Price and quantity change in different direction
- When the supply curve shifts to the left, it means supply decreases, which creates a shortage at the original equilibrium price.
- To restore equilibrium:
- Equilibrium price increases because fewer goods are available.
- Equilibrium quantity decreases because the market now has less supply.
- Since price increases and quantity decreases (opposite directions), they change in different directions.