If supply increases, ceteris paribus, the quantity exchanged will be ______ at the new market equilibrium point.
A) larger
B) smaller
C) the same
D) either larger or smaller

Question

Quizplus · Accepted Answer

If supply increases while everything else remains constant (ceteris paribus), the supply curve will shift to the right. This will result in a lower equilibrium price and a higher equilibrium quantity. The increase in quantity exchanged at the new market equilibrium point indicates that the demand curve intersects with the new supply curve at a higher quantity demanded, demonstrating that the quantity exchanged is larger.

If Supply Increases, Ceteris Paribus, the Quantity Exchanged Will Be