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Equilibrium price increases, equilibrium quantity decreases
Equilibrium price decreases, equilibrium quantity increases
Equilibrium price remains unchanged, equilibrium quantity increases
Equilibrium price increases, equilibrium quantity remains unchanged
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When suppliers face higher costs, they produce less. Other options are incorrect because The idea that a higher cost makes the price drop is wrong; Keeping the price the same while supply drops is impossible.
Key Concepts
Shifts in Supply Curve
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Deep Dive: Shifts in Supply Curve
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Definition
Shifts in the supply curve occur when factors other than price influence the quantity of a product supplied at each price level. Changes in production costs, technology, government policies, and expectations can shift the supply curve either outward (increase in supply) or inward (decrease in supply).
Topic Definition
Shifts in the supply curve occur when factors other than price influence the quantity of a product supplied at each price level. Changes in production costs, technology, government policies, and expectations can shift the supply curve either outward (increase in supply) or inward (decrease in supply).
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