Assume that both the demand curve and the supply curve for MP3 players shift to the right but the supply curve shifts more than the demand curve.As a result
A)both the equilibrium price and quantity of MP3 players will decrease.
B)the equilibrium price of MP3 players will decrease; the equilibrium quantity will increase.
C)the equilibrium price of MP3 players may increase or decrease; the equilibrium quantity will decrease.
D)the equilibrium price of MP3 players will increase; the equilibrium quantity will decrease.

Question

Quizplus · Accepted Answer

When the supply curve shifts more than the demand curve, it indicates that the market is experiencing increased production at a lower cost. This leads to a larger increase in the quantity supplied than the increase in quantity demanded, resulting in a surplus of MP3 players. To clear the surplus, suppliers reduce the price of MP3 players, leading to a lower equilibrium price. However, the increase in quantity supplied leads to a higher equilibrium quantity. Therefore, the equilibrium price of MP3 players will decrease, and the equilibrium quantity will increase.

Assume That Both the Demand Curve and the Supply Curve