What will happen to market equilibrium when supply increases, assuming demand remains constant?Refer to the eBook

Question

BlackTom AI · Accepted Answer

Let’s break down what happens when supply increases while demand stays the same. 
Option a: 'Price will rise and quantity will increase.' This would imply a rightward shift in demand or a combination that raises price, but with only supply increasing, the price should move downward, not upward. So this is inconsistent with the scenario. 
Option b: 'Price will fall and quantity will decrease.' A fall in price is plausible with increased supply, but the accompanying decrease in quantity is not: when supply increases, the intersection point with the same demand curve moves to a higher quantity, not a lower one. Therefore this option mixes an expected price drop with an incorrect quantity change. 
Option c: 'Price will rise and quantity will decrease.' This describes a leftward shift in supply or a decreased supply scenario, which is the opposite of what’s given. It contradicts the condition that supply increases. Hence this option is incorrect. 
Option d: 'Price will fall and quantity will increase.' With a higher supply, the supply curve shifts rightward. To re-establish equilibrium with the same demand, the intersection moves to a higher quantity and a lower price. This aligns with the standard supply-demand framework: more supply lowers the price and raises the quantity traded. 
In summary, only the scenario described in option d matches the economic effect of an increased supply with demand constant, while the other options contradict the direction of change implied by a rightward shift in supply.

What will happen to market equilibrium when supply increases, assuming demand remains constant?Refer to the eBookSingle choice

Similar Questions

Price decreases for a product are most likely to occur when

Assume that a competitive industry producing a normal good is in long-run equilibrium. If average consumer income decreases, which of the following changes will occur?

Which of the following describes how a market will respond when the scarcity of a good increases?

Assume that consumers consider popcorn and pretzels to be substitutes. A significant decrease in the supply of popcorn will affect the pretzel market by

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

At an initial equilibrium, demand curve shifts to the left, supply curve remain unchanged. This creates and prices will _ restore the market equilibrium.

At an initial equilibrium, supply curve shifts to the left, demand curve remain unchanged. This creates and prices will _ restore the market equilibrium.

Due to the Covid-19 Pandemic, the demand for face masks and sanitizers have greatly increased which also increased the price for these products by 50%. Which of the following statements is true?

More Practical Tools for Students Powered by AI Study Helper

Homework AI Solver

Stylized AI Paper Writer

Plagiarism Checker Assistant

Citation AI Academic Writing Tool

In-Class Translation Assistant

AI Note Generator

AI Quiz Answers

Past Exam Questions from University Test Bank

Smart Practice Assistant

Adaptive Practice

Making Your Study Simpler