Question 48

Quantity increases.

When supply increases while demand remains constant, the equilibrium quantity in the market will rise as more goods become available for consumers to purchase.

A) Quantity increases.

This option is correct because an increase in supply leads to more goods being available in the market. As a result, sellers can sell more at the existing price level, ultimately increasing the equilibrium quantity.

B) Price increases.

This option is incorrect because when supply increases without a change in demand, the increased availability of goods typically leads to a decrease in price, not an increase. The market adjusts to accommodate the larger quantity available.

C) Quantity decreases.

This option is incorrect as it contradicts the basic principles of supply and demand. An increase in supply does not cause a decrease in quantity; instead, it allows for more goods to be sold.

D) Price remains the same.

This option is also incorrect because while the price may not change immediately, the overall market tendency is for the price to decrease when supply increases. Thus, price adjustments are expected, especially in the long run.

Conclusion

The correct answer is A) Quantity increases, as it reflects the fundamental economic principle that an increase in supply leads to a higher equilibrium quantity. All other options fail because they misinterpret the effects of supply changes on market dynamics, particularly the relationship between supply, demand, and equilibrium price.