Simultaneous supply decrease and demand increase Steps:

• Rising raw material costs shift the supply curve (S) leftward, raising equilibrium price and lowering quantity.
• Increasing incomes of the rich shift the demand curve (D) rightward for luxury watches, raising equilibrium price and increasing quantity.
• The combined shifts result in a higher price; quantity effect is ambiguous, depending on relative shift sizes.
• Point B reflects the most likely outcome: higher price with quantity near original level.

Why B is correct:

• B shows unambiguously higher price from both shifts, with quantity stable as demand increase offsets supply decrease (law of supply and demand).

Why the others are wrong:

• A: Shows lower quantity but ignores demand-driven quantity increase.
• C: Shows lower price, contradicting both shifts' upward pressure on price.
• D: Shows lower price and quantity, opposite to demand expansion.

Final answer: B