The figure given below shows the demand [D and D'] and supply [S and S'] curves of shares of stock. Figure 16.2 According to Figure 16.2, what will be a necessary result of a simultaneous increase in the supply of stocks from S to S'and decrease in the demand from D to D'?

Question

Quizplus · Accepted Answer

When the supply of stocks increases and the demand decreases, there will be a surplus of stocks, meaning that there are more stocks available for sale than there are buyers. In a competitive market, this will lead to a decrease in the price of the shares, as sellers will seek to lower the price in order to attract buyers. Therefore, the necessary result of the given scenario is a decrease in the price of the shares, which is option A.

The Figure Given Below Shows the Demand [D and D']