Holding demand constant, an increase in supply leads to
A) lower prices and higher quantity demanded.
B) lower prices and lower quantity demanded.
C) higher prices and higher quantity demanded.
D) higher prices and lower quantity demanded.

Question

Quizplus · Accepted Answer

According to the law of supply and demand, when supply increases while demand stays the same, the market tends to lower prices in order to sell the extra supply. This, in turn, leads to an increase in the quantity demanded as consumers are willing to buy more at a lower price. Therefore, there is an inverse relationship between price and quantity demanded when supply increases while demand remains constant.

Holding Demand Constant, an Increase in Supply Leads to