Question 8
Theory of SupplyA shift in the supply curve to the right will result in a
- A.fall in both the price and supply
- B.fall in price but an increase in supply
- C.rise in both price and supply
- D.rise in price and a fall in supply
- E.no change in price and supply
Show the answer and explanation
Answer: B (fall in price but an increase in supply)
Explanation
An increase in supply (shift to the right) with demand unchanged lowers the equilibrium price and raises quantity.