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JAMB Economics 2004 Question 45

Question 45

Price Determination

Use the diagram above to answer this question. When there is a change from T to N, it implies that

Diagram for this question
  1. A.supply has increased
  2. B.quantity supplied has increased
  3. C.quantity demanded has increased
  4. D.price has fallen
Show the answer and explanation

Answer: A (supply has increased)

Explanation

Use the diagram. T is on S1 and N is on S2, which lies to the right; moving to a new curve to the right means supply has increased.