Decrease in Supply:
On the other hand, if demand remains constant but supply decreases, the supply curve will shift curve will shift completely to the left whiles nothing happens to the demand curve. This will increase the equilibrium market price and the equilibrium quantity on the other hand will decrease.
In Figure, a decrease in the supply of Amala whilst its demand remains constant will shift its supply curve from S0 to S2. At the initial equilibrium market price of c5,000. There will be excess demand or shortage of Amala of 30 (40 minus 10) bags. The surplus will cause the equilibrium market price of Amala to rise to c6,000 and the equilibrium quantity will decrease from 40 to 20 bags.