Question

Ceteris paribus, an increase in the number of sellers of running shoes causes equilibrium price to: a. Decrease and equilibrium quantity to increase. b. Decrease and equilibrium quantity to decrease. c. Increase and equilibrium quantity to increase. d. Increase and equilibrium quantity to decrease.

Answer 1

Answer:

a. Decrease and equilibrium quantity to increase

Explanation:

An increase in the number of sellers of running shoes increases the supply of running shoes. An increase in supply leads to an increase in equilibrium quantity and a fall in equilibrium price.

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Answer 2

Answer:

a. Decrease and equilibrium quantity to increase.

Explanation:

A supply shift happens as a result of changes in other factors except for price that affects the quantity of goods that a supplier can make available to the buyer.

All things being equal when there is a supply shift to the right when the number of shoe sellers increases.

With reference to the attached diagram this will result in reduction in equillibruim price from P1 to P2, and an increase in equillibrum quantity from Q1 to Q2.