Praxis II Citizenship

Answer: A - A decrease in supply will cause a decrease in quantity and an increase in prices. A decrease in supply causes producers to make fewer units of the product, creating scarcity. Subsequently prices for the product rise. (B) is incorrect because an increase in supply will cause an increase in quantity and a decrease in prices. Generally, the greater the availability, the lower the price. (C) is incorrect because a decrease in demand will cause a decrease in prices and quantity will stay at equilibrium. If demand decreases, producers will decrease the price to encourage more demand, and they will already have enough of the product available. (D) is incorrect because an increase in demand will cause an increase in prices and an increase in quantity at equilibrium.