Figure 3-2
-Refer to Figure 3-2.An increase in the number of firms in the market would be represented by a movement from
A)A to B.
B)B to A.
C)S1 to S2.
D)S2 to S1.

Question

Figure 3-2 
-Refer to Figure 3-2.An increase in the number of firms in the market would be represented by a movement from
A)A to B. 
B)B to A. 
C)S1 to S2. 
D)S2 to S1.

Quizplus · Accepted Answer

An increase in the number of firms in the market would result in an increase in supply, shifting the supply curve to the right from S1 to S2. This would result in a lower equilibrium price (P2) and a higher equilibrium quantity (Q2) as shown in the diagram. Therefore, the correct choice is C, S1 to S2.

Figure 3-2 -Refer to Figure 3-2.An Increase in the Number of Firms