Suppose that initially, the equations for demand and supply are Qd = 48 − 4P and Qs = 4P − 16, respectively. If the quantity supplied increases by 4 at every price (so that the supply curve shifts to the right), the equilibrium price will change from:
A) $8 to $7.50.
B) $8 to $12.
C) $12 to $8.
D) $7.50 to $8.

Question

Quizplus · Accepted Answer

Initially, set Qd = Qs: 48 - 4P = 4P - 16, solving gives P = 8. With supply increasing by 4, new Qs = 4P - 12. Set Qd = new Qs: 48 - 4P = 4P - 12, solving gives P = 7.50.

Suppose That Initially, the Equations for Demand and Supply Are