In the coffee market, which of the following changes will increase the price and decrease the quantity of coffee?

Question

BlackTom AI · Accepted Answer

In this question, we are asked which change in the coffee market would lead to a higher price and a lower quantity for coffee.
Option 1: supply decreases and demand increases. A leftward shift in supply tends to raise price, and a rightward shift in demand tends to raise quantity as well as price. The combination makes it unclear whether quantity would fall; in many analyses, quantity would rise due to higher demand, so this option does not clearly produce a decreased quantity.
Option 2: supply unchanged and demand increases. With no change in supply and an increase in demand, the price rises and the quantity traded also rises. This option does not produce a decrease in quantity, so it’s not the correct pattern.
Option 3: supply increases and demand increases. An increase in supply tends to push price down unless demand increases enough to offset it; with both increasing, the net effect on price is ambiguous, but quantity would likely rise. This option does not yield a higher price with a lower quantity.
Option 4: supply increases and demand decreases. Higher supply tends to lower price, and lower demand tends to reduce quantity traded further. This combination would more plausibly lead to a lower price and lower quantity, not a higher price with a lower quantity.
Option 5: supply decreases and demand remains unchanged. A leftward shift in supply, with demand fixed, raises the price and reduces the quantity traded. This exactly matches the scenario described: higher price and lower quantity.
Therefore, the option that aligns with increasing price while decreasing quantity, given the changes specified, is the one where supply decreases and demand is unchanged. The other options fail to produce both a higher price and a lower quantity under their stated shifts.

In the coffee market, which of the following changes will increase the price and decrease the quantity of coffee?Single choice

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