What is the primary effect of a decrease in supply on market equilibrium?

A decrease in supply in a market means that fewer goods or services are available for sale at every price level. When supply decreases, the supply curve shifts to the left. This shift leads to a new market equilibrium, where the quantity supplied is now less than before at the original equilibrium price.

As a result, the decrease in supply creates upward pressure on prices because the same quantity is now being demanded, but there are fewer goods available. To maintain equilibrium, sellers will raise prices, leading to a rise in the equilibrium price. Meanwhile, the new equilibrium quantity will be lower because the decreased supply means that fewer goods are available in the market.

Therefore, the primary effect of a decrease in supply is that the equilibrium price rises while the equilibrium quantity falls. This understanding of how supply and demand interact is vital in analyzing market dynamics and predicting changes in market conditions.