What is the effect on equilibrium when there is an increase in supply with unchanged demand?

Increase in equilibrium quantity and decrease in equilibrium price

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Increase in equilibrium price and decrease in equilibrium quantity

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Decrease in equilibrium quantity and equilibrium price

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None of these

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Solution

The correct option is A Increase in equilibrium quantity and decrease in equilibrium price
If demand increases (decreases) and supply is unchanged, then it leads to a higher (lower) equilibrium price and quantity. If supply increases (decreases) and demand is unchanged, then it leads to a lower (higher) equilibrium price and higher (lower) quantity.

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Similar questions

An increase in demand leads to a decrease in both the equilibrium price and the equilibrium quantity. A decrease in demand leads to a rise in both the equilibrium price and the equilibrium quantity.

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