With a given demand curve, an increase in supply will:
A) increase both the price of the good and the equilibrium quantity.
B) decrease the price of the good but will increase the equilibrium quantity.
C) decrease both the price of the good and the equilibrium quantity.
D) increase the price of the good but will decrease the equilibrium quantity.

Question

Quizplus · Accepted Answer

An increase in supply, with demand remaining constant, leads to a decrease in the price of the good because there is more of the good available. However, the equilibrium quantity increases because the lower price encourages more consumers to buy the good.

With a Given Demand Curve, an Increase in Supply Will