Questions: Question 5 If supply decreases along a given demand curve, a. an excess quantity demanded will be created, increasing the equilibrium price and causing equilibrium quantity to fall b. an excess quantity supplied will be created, lowering the equilibrium price and causing equilibrium quantity to rise c. an excess quantity supplied will be created, lowering the equilibrium price and quantity d. price will fall, shifting the demand curve outward, raising the equilibrium quantity e. an excess quantity demanded will be created, raising the equilibrium price and quantity

The answer is a. an excess quantity demanded will be created, increasing the equilibrium price and causing equilibrium quantity to fall.

When supply decreases along a given demand curve, the quantity supplied at the original equilibrium price is less than the quantity demanded, creating an excess quantity demanded. This excess demand puts upward pressure on the price, leading to an increase in the equilibrium price. As the price rises, the quantity demanded decreases, resulting in a lower equilibrium quantity.

This option is incorrect because a decrease in supply does not create an excess quantity supplied; rather, it creates an excess quantity demanded. The equilibrium price would rise, not fall, and the equilibrium quantity would decrease, not increase.

This option is incorrect because a decrease in supply does not lead to an excess quantity supplied. Instead, it results in an excess quantity demanded, which increases the equilibrium price.

This option is incorrect because a decrease in supply does not cause the price to fall. Instead, it causes the price to rise due to the excess quantity demanded.

This option is partially correct in stating that an excess quantity demanded will be created and the equilibrium price will rise. However, it incorrectly states that the equilibrium quantity will rise, whereas it actually falls.