Look at the graph. The retailer decreased the price of green glass ornaments to $10. Which of these would occur? A. A new equilibrium point, because the demand would decrease. B. A shortage, because the price is lower than equilibrium price. C. A surplus, because the price is lower than equilibrium price. D. Selling more ornaments, because reducing the price would increase supply. (Graph is down below)

A decrease in price leads to an increase in demand, but because there is no comensurate increase in supply. This leads to shortage.

Option B is the correct answer.

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sp10925 sp10925 · Answer 2 · 2022-06-07T11:52:22+02:00

The retailer decreased the price of green glass ornaments. A shortage would occur because the price is lower than equilibrium price. The correct option is B.

What is equilibrium price?

An equilibrium price is a balance of demand and supply factors.

If there is an increase in the demand for a commodity but no change in the supply then, there is a rightward shift in the demand curve for a commodity.

This will increase the equilibrium price and equilibrium quantity of the commodity.

A decrease in price will lead to an increase in demand, with no increase in supply. This leads to shortage.

Thus, the correct answer is B.

Learn more about equilibrium price.

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