What will cause a decrease in market equilibrium price and an increase in equilibrium quantity?
an increase in supply
an increase in demand
1 Answer | Add Yours
Of the options that you have given here, the thing that would cause an increase in equilibrium quantity and a decrease in equilibrium price is an increase in supply.
To see how this works, the best thing to do is use a graph. First, you draw supply and demand curves to represent the equilibrium price and quantity before the change. Then, you draw in a new supply curve to show an increase in supply. An increase in supply is shown by a movement of the curve to the right.
When you move the supply curve to the right (assuming the demand curve does not move) you have a new equilibrium in which the price has gone down while the quantity has increased.
Join to answer this question
Join a community of thousands of dedicated teachers and students.Join eNotes