A decrease in the quantity supplied is shown by a
A) movement down along the supply curve.
B) movement up along the supply curve.
C) rightward shift of the supply curve.
D) leftward shift of the supply curve.
E) rightward shift of the demand curve.
The correct answer and explanation is :
Correct Answer: A) movement down along the supply curve.
Explanation:
A decrease in the quantity supplied refers specifically to a movement along a given supply curve due to a change in the price of the good or service, not a shift of the entire curve.
The supply curve shows the relationship between the price of a good and the quantity producers are willing and able to sell. It typically slopes upward, meaning that as the price increases, the quantity supplied increases, and as the price decreases, the quantity supplied decreases.
When we say there is a decrease in quantity supplied, we mean that the price of the good has fallen, and as a result, producers are willing to supply less. This is shown graphically as a movement down along the supply curve, which is option A. It’s important to note that this is not the same as a decrease in supply, which would involve a shift of the entire supply curve to the left (option D).
The difference between quantity supplied and supply is crucial:
- Quantity supplied changes in response to price changes and is illustrated by a movement along the curve.
- Supply, on the other hand, changes due to non-price factors (like technology, input prices, or regulations) and is shown as a shift of the curve.
Options B, C, D, and E are incorrect for the following reasons:
- B: Movement up along the supply curve reflects an increase in quantity supplied, not a decrease.
- C: A rightward shift of the supply curve indicates an increase in supply, not a decrease in quantity supplied.
- D: A leftward shift represents a decrease in supply, not in quantity supplied.
- E: A shift in the demand curve affects quantity demanded, not quantity supplied.
Thus, option A best describes a decrease in quantity supplied due to a lower market price.