The initial equilibrium price in the market for Web pages is $200 per page and 1000 Web pages are created in a month.Many new Web design firms now enter the market.As a result,
A) the supply of Web pages increases and the price falls.
B) the supply curve of Web pages shifts leftward and the price falls.
C) the demand for Web pages increases and the price rises.
D) the supply of web pages increase and the price falls, which then increases the demand for Web pages and the demand curve shifts rightward.
E) the demand for Web pages increases and the price falls.

Question

Quizplus · Accepted Answer

With the entry of new Web design firms, the supply of Web pages will increase. This shift in the supply curve will lead to an increase in the quantity supplied at every price level, leading to a surplus of Web pages. The increased competition among the firms will also compel them to lower their prices to attract customers. Therefore, the price of Web pages will fall.

The Initial Equilibrium Price in the Market for Web Pages