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Homework answers / question archive / Which of the following statements is (are) correct? x) If the supply of a product increases, it would be expected that the equilibrium price would decrease and the equilibrium quantity would increase
Which of the following statements is (are) correct?
x) If the supply of a product increases, it would be expected that the equilibrium price would decrease and the equilibrium quantity would increase.
(y) If the demand for a product decreases, it would be expected that the equilibrium price would decrease and the equilibrium quantity would decrease.
(z) If the demand for a product decreases or the supply of a product increases, it would be expected that the equilibrium price would decrease.
A. (x), (y) and (z)
B. (x) and (y) only
C. (x) and (z) only
D. (y) and (z) only
E. (x) only
Following statements are correct:
B. (x) and (y) only
x) If the supply of a product increases, it would be expected that the equilibrium price would decrease and the equilibrium quantity would increase.
When supply increases, the supply curve shifts to right side. This will cause increase in equilibrium output but fall in equilibrium price. This statement is correct.
(y) If the demand for a product decreases, it would be expected that the equilibrium price would decrease and the equilibrium quantity would decrease.
When demand decreases, it will cause the demand curve shifts downward. This will cause reduction in price and output. This statement is true.
(z) If the demand for a product decreases or the supply of a product increases, it would be expected that the equilibrium price would decrease.
With decrease in demand, the demand curve shifts downward, causing reduction in both price and output. When supply increases, the supply curve shifts rightward, causing reduction in price but increase in output. Thus, this statement is wrong.
