Friday, May 16, 2008

An Increase in Supply

An increase in supply is represented by a shift of the supply curve to the right.
Ceteris paribus, in the new equilibrium:

Supply has increased. (The supply curve shifted to the right.)
Demand is unchanged. (The demand curve did not move.)
The quantity supplied increased to the new equilibrium quantity.
The quantity demanded increased to the new equilibrium quantity.
The equilibrium price decreased.

1 comment:

  1. Thanks for the blog! It's comprehensive.
    I would like to ask a qn. Why is the term "quantity supplied" used instead of supply since the two lines rep supply are parallel.ANd why didn't the qty demanded decrease?

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