Use the following diagram. Suppose an advance in technology causes supply to increase from S₁ to S₂. At price P₁ there is:

Question

Quizplus · Accepted Answer

At price P1, the quantity demanded is Q₄ and the quantity supplied initially was Q₃. However, with the advance in technology, the supply increases to S2 which means the new quantity supplied at price P1 is Q2. As Q2>Q₃, there is now an excess supply of Q₄ - Q2. Therefore, the correct answer is D.

Use the Following Diagram