Equilibrium price will decrease and quantity will increase in which of the following conditions?
Answer & explanation
Correct answer: option 4
The correct answer is Option 4: Increase in supply
- Equilibrium price and equilibrium quantity are determined by the intersection of the demand and supply curves.
- When supply increases (i.e., more goods are available in the market), the supply curve shifts rightward.
- This causes the equilibrium price to fall and the equilibrium quantity to rise, as producers are willing to sell more at lower prices.