Ceteris paribus, an increase in the supply of a good causes which of the following?
A) Lowers the equilibrium price, and reduces the quantity bought and sold.
B) Raises the equilibrium price, and raises the quantity bought and sold.
C) Raises the equilibrium price, and increases the quantity bought and sold.
D) Lowers the equilibrium price, and increases the quantity bought and sold.
E) Equilibrium price and equilibrium quantity change are indeterminate.

Question

Quizplus · Accepted Answer

According to the law of supply, as the supply of a good increases, the equilibrium price decreases, and the equilibrium quantity increases. Therefore, choice D is the correct answer, while the other options are incorrect.

Ceteris Paribus, an Increase in the Supply of a Good