Suppose that supply increases and demand decreases. What is the most likely effect on price and quantity?
A)The price will increase, but quantity may increase, decrease, or stay the same.
B)The price will decrease, but quantity may increase, decrease, or stay the same.
C)The price will decrease and quantity will decrease.
D)The price will increase and quantity will increase.

Question

Quizplus · Accepted Answer

When supply increases and demand decreases, there will be an excess supply of the product in the market, leading to a decrease in price. However, the change in quantity is uncertain since the decrease in demand may offset the increase in supply or vice versa. Therefore, the quantity may increase, decrease, or remain unchanged.

Suppose That Supply Increases and Demand Decreases