Select the phrase that correctly completes the following statement."A decrease in the expected future price caused an increase in the supply of smartphones.As a result
A)the price of smartphones decreased and the demand for smartphones increased."
B)the equilibrium quantity of smartphones decreased."
C)the price of smartphones decreased and the quantity of smartphones demanded increased."
D)the price of smartphones decreased.The lower price caused the supply of smartphones to decrease."

Question

Quizplus · Accepted Answer

According to the law of supply, a decrease in expected future prices will lead to an increase in supply. This means that there will be more smartphones supplied in the market. As a result, the price of smartphones will decrease and the quantity of smartphones demanded will increase, which is reflected in choice C. Option A is incorrect because a decrease in price is due to an increase in supply rather than an increase in demand. Option B is incorrect because an increase in supply would lead to an increase, not a decrease, in equilibrium quantity. Option D is incorrect because the text explicitly states that there was an increase, not a decrease, in the supply of smartphones.

Select the Phrase That Correctly Completes the Following Statement