Multiple Choice
Which factor would most likely cause the supply of a company's product to increase?
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3. The Market Forces of Supply and Demand
Supply and Demand: Quantitative Analysis
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Join thousands of students who trust us to help them ace their exams!Watch the first videoMultiple Choice
A decrease in the price of a good would most likely:
A
Have no effect on the quantity demanded
B
Increase the quantity demanded of the good
C
Decrease the quantity demanded of the good
D
Increase the supply of the good
Verified step by step guidance1
Recall the Law of Demand, which states that, ceteris paribus, when the price of a good decreases, the quantity demanded of that good increases.
Understand that a change in price causes a movement along the demand curve, not a shift of the demand curve itself.
Identify that a decrease in price leads to an increase in quantity demanded, meaning consumers are willing and able to buy more of the good at the lower price.
Recognize that 'quantity demanded' refers to a specific point on the demand curve, while 'demand' refers to the entire curve.
Note that supply is not directly affected by a change in the price of the good in this context; supply changes are caused by other factors such as production costs or technology.
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