Given generally elastic demand and supply curves for an industry, an INCREASE in supply will (all other things being equal):
A) lower price but not change quantity demanded.
B) increase price and increase quantity demanded.
C) increase price and decrease quantity demanded.
D) lower price and increase quantity demanded.
E) not change anything else.

Question

Quizplus · Accepted Answer

An increase in supply will lead to a surplus, which lowers the market price. This lower price will in turn increase quantity demanded. This is consistent with the law of supply and demand, which states that as price decreases, quantity demanded increases, all other things being equal.

Given Generally Elastic Demand and Supply Curves for an Industry