in the diagram, when supply increases, develops at the original price. equilibrium price will and…
in the diagram, when supply increases, develops at the original price. equilibrium price will and equilibrium quantity will as a new equilibrium is established.
Answer
Explanation:
Step1: Analyze supply - increase effect at original price
When supply increases at the original price, quantity supplied exceeds quantity demanded, creating a surplus.
Step2: Determine equilibrium price change
With a surplus, sellers lower prices to sell more. So, equilibrium price decreases.
Step3: Determine equilibrium quantity change
As price decreases, quantity demanded increases according to the law of demand. Also, the increased supply means more is available in the market. So, equilibrium quantity increases.
Answer:
- A surplus; 2. Decrease; 3. Increase