Asked by Johnny Gomez on May 04, 2024
Verified
Suppose that supply increases and demand decreases.What is the MOST likely effect on price and quantity?
A) The price will increase,but quantity may increase,decrease,or stay the same.
B) The price will decrease,but quantity may increase,decrease,or stay the same.
C) The price will decrease and quantity will decrease.
D) The price will increase and quantity will increase.
Supply Increases
A condition in which the quantity of goods and services offered by businesses rises, often leading to lower prices if demand remains constant.
Demand Decreases
Occurs when consumers are less willing or able to purchase a product at any given price, leading to a leftward shift in the demand curve.
- Understand the influence of supply and demand evolution on price and quantity equilibrium.
- Evaluate the consequences on the market from alterations in supply and/or demand.
Verified Answer
RJ
Rachel JonesMay 06, 2024
Final Answer :
B
Explanation :
When supply increases and demand decreases, there will be an excess supply of the product in the market. This will lead to a decrease in price and the quantity will depend on the extent of the shift in supply and demand. If the increase in supply is greater than the decrease in demand, then there will be an increase in quantity. If the decrease in demand is greater than the increase in supply, then there will be a decrease in quantity. If the shift in supply and demand is equal, then quantity will remain the same. Therefore, the price will decrease, but quantity may increase, decrease, or stay the same.
Learning Objectives
- Understand the influence of supply and demand evolution on price and quantity equilibrium.
- Evaluate the consequences on the market from alterations in supply and/or demand.