If the supply of pencils decreases what will happen to the equilibrium price of pencils and...
If the supply of pencils decreases what will happen to the equilibrium price of pencils and to the equilibrium price of paper? Explain
Homework Answers
Answer
the decrease in the supply shifts the supply curve to the left and up which increases the price and decreases quantity of the pencils.
It increases the equilibrium price of the pencils
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Paper and pencil are complement goods so the increase in the price of pencils decreases the demand for the papers which shifts the demand curve of papers left and down which decreases the price and quantity of paper in the new equilibrium.
the equilibrium price of paper decreases.
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