What is the effect of a rightward shift in the supply curve on the equilibrium price and quantity?

What is the effect of a rightward shift in the supply curve on the equilibrium price and quantity?

• A. Price rises and quantity rises
• B. Price falls and quantity rises
• C. Price rises and quantity falls
• D. Price falls and quantity falls

Answer: (B)

A rightward shift in the supply curve means producers are willing to supply more at every price, so market supply increases. With demand unchanged, the new intersection with the demand curve occurs at a lower price and a higher quantity, so the equilibrium price falls and the equilibrium quantity rises. This matches the scenario where price drops while more is traded. The other outcomes would require changes in demand or a leftward shift in supply (which would push prices up and reduce quantity, or cause different combinations).

A rightward shift in the supply curve means producers are willing to supply more at every price, so market supply increases. With demand unchanged, the new intersection with the demand curve occurs at a lower price and a higher quantity, so the equilibrium price falls and the equilibrium quantity rises. This matches the scenario where price drops while more is traded. The other outcomes would require changes in demand or a leftward shift in supply (which would push prices up and reduce quantity, or cause different combinations).