Question on: JAMB Economics - 1995
Which of the following statement is TRUE of the effect of changes in demand and supply on price?
A
A decrease in supply will lead to fall in price and a fall in the quantity bought and sold
B
An increase in demand will lead to a fall in price and quantity bought and sold
C
A decrease in demand will lead to a rise in price and in the quantity bought and sold
D
An increase in supply will lead to a fall price and a rise in the quantity bought and sold
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Correct Option: D
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Increase in Supply: An increase in supply means that more goods are available in the market at any given price. This leads to a downward pressure on the price as the excess supply forces sellers to lower prices to attract buyers. The quantity bought and sold will increase as lower prices incentivize consumers to purchase more.
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A decrease in supply would lead to a rise in price and fall in quantity bought and sold.
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An increase in demand would lead to a rise in price and an increase in quantity bought and sold.
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A decrease in demand would lead to a fall in price and a decrease in quantity bought and sold.
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