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Homework answers / question archive / Which of the following would cause a decrease in market equilibrium price and an increase in equilibrium quantity? A
Which of the following would cause a decrease in market equilibrium price and an increase in equilibrium quantity?
A. An increase in demand
B. A decrease in supply
C. An increase in supply
D. A decrease in demand
The correct option is (c).
An increase in supply would cause a decrease in market equilibrium price and an increase in equilibrium quantity.
An increase in supply means that the supply of a good increase at each level of price. Such an increase in supply creates a surplus in the market, which drives the price downward. Hence, people will tend to consume more of the goods at a lower price.
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