An increase in supply will cause equilibrium price to __________ and equilibrium quantity to __________.

Question

Quizplus · Accepted Answer

According to the law of supply, as the supply of a good or service increases, its price decreases. This is because an increase in supply means producers are willing and able to sell more at each price level, resulting in a surplus. As a result, purchasers will demand lower prices to buy more of the excess supply, leading to a decrease in the equilibrium price. At the same time, suppliers will be willing to sell more goods at the lower price, resulting in an increase in the equilibrium quantity.

An Increase in Supply Will Cause Equilibrium Price to __________