Business – 3.1 The nature of marketing – Demand and supply | e-Consult
3.1 The nature of marketing – Demand and supply (1 questions)
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Answer:
- An increase in supply means the supply curve shifts right (more quantity supplied at each price). A decrease in demand means the demand curve shifts left (less quantity demanded at each price).
- Price: Both changes put downward pressure on price – a right‑shifted supply curve pushes price down, and a left‑shifted demand curve also pushes price down. Therefore, equilibrium price is expected to fall.
- Quantity: The supply increase tends to raise equilibrium quantity, whereas the demand decrease tends to lower it. Because the two effects work in opposite directions, the net change in quantity depends on the relative magnitude of the shifts, making it uncertain.
- Thus, price will almost certainly fall, while quantity may rise, fall, or remain unchanged.