ECONOMICS
DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Existing firms produce more AND new firms enter the market
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Existing firms produce less AND firms exit the market
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The supply curve shifts to the left
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Existing firms produce less AND new firms enter the market
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Detailed explanation-1: -If consumer demand rises over time, the price will rise, and suppliers can choose to devote new resources to production (or new suppliers can enter the market), which increases the quantity supplied.
Detailed explanation-2: -The law of supply states that there is a direct relationship between price and quantity supplied. In other words, when the price increases the quantity supplied also increases. This is represented by an upward sloping line from left to right.
Detailed explanation-3: -Economists call this positive relationship between price and quantity supplied-that a higher price leads to a higher quantity supplied and a lower price leads to a lower quantity supplied-the law of supply.
Detailed explanation-4: -If there is an increase in supply for goods and services while demand remains the same, prices tend to fall to a lower equilibrium price and a higher equilibrium quantity of goods and services.
Detailed explanation-5: -If the number of firms in a market increases, then the market supply curve will shift rightward as there will be more number of firms supplying more amount of output.