Market Equilibrium and Shifts in Demand and Supply

-Assume that column A and column C are the initial demand and supply curves.If supply changes to column D,one can infer the new equilibrium
A) price will be less than $40.
B) quantity will be greater than 70 units.
C) price will be greater than $50.
D) quantity will be less than 60 units.
E) quantity will be less than 70 units but greater than 60 units.

Question

Market Equilibrium and Shifts in Demand and Supply
 
-Assume that column A and column C are the initial demand and supply curves.If supply changes to column D,one can infer the new equilibrium
A) price will be less than $40. 
B) quantity will be greater than 70 units. 
C) price will be greater than $50. 
D) quantity will be less than 60 units. 
E) quantity will be less than 70 units but greater than 60 units.

Quizplus · Accepted Answer

From the initial equilibrium point (where demand and supply curves intersect), we can see that the price is around $50 and the quantity is around 70 units.

When the supply curve shifts to the right (from C to D), the new equilibrium point will have a lower price and a higher quantity. This is because there is now more supply available at any given price level.

Looking at the intersections of the new supply curve (D) with the initial demand curve (A), we can see that the price is now around $45 and the quantity has increased to around 75 units. Therefore, the new equilibrium quantity will be less than 80 (the quantity at the old equilibrium point) but greater than 60 (the quantity at the intersection of initial demand and new supply).

Thus, the best choice is E: quantity will be less than 70 units but greater than 60 units.