Answer to Question #284451 in Microeconomics for odrey

Question

If the price of lemonade decreases due to insufficient demand, and its supply decreases at the same time, the equilibrium price will clearly rise.

Answer 1

The statement is true.

When supply decreases, it implies a shift in supply curve to the left which denotes an increase in price. For a given demand curve in this case, it implies that equilibrium price increases while the equilibrium quantity decreases.