A large increase in the supply of smart TVs occurs simultaneously with a smaller decrease in its demand. As a result, the equilibrium price will
A) increase and the equilibrium quantity will decrease.
B) increase and the equilibrium quantity will increase.
C) decrease and the equilibrium quantity will decrease.
D) decrease and the equilibrium quantity will increase.

Question

Quizplus · Accepted Answer

When there is a large increase in supply and a smaller decrease in demand, the market will experience a surplus of smart TVs. This surplus will put downward pressure on the price, causing it to decrease. At the same time, the increase in supply will lead to an increase in the equilibrium quantity. Therefore, the equilibrium price will decrease and the equilibrium quantity will increase, making option D the correct answer.

A Large Increase in the Supply of Smart TVs Occurs