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Market for a good is in equilibrium. There is “increase” in supply of the good. Explain the chain of effects of this change

      

Market for a good is in equilibrium. There is “increase” in supply of the good. Explain the chain of effects of this change

  

Answers


marlyne
Increase in supply shifts the supply curve to the right. There will be excess supply at the same equilibrium price. The competition among sellers to sell their excess quantity leads to fall in price. When price falls demand rises. These changes
continue till D=S at a new equilibrium. The new price will be less than the original equilibrium price
marlinbito answered the question on May 12, 2018 at 12:54


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