Final answer:
An increase in supply with a slight decrease in demand generally leads to a higher equilibrium quantity and a lower equilibrium price. The final equilibrium price and quantity are determined by the relative shifts in supply and demand curves.
Step-by-step explanation:
When the supply curve shifts significantly to the right, it suggests an increase in supply, whereas a slight shift to the left in the demand curve indicates a decrease in demand. In such a scenario, the equilibrium quantity generally increases due to the greater availability of goods. However, the equilibrium price tends to decrease because the higher supply meets the lower demand at a lower price point. If both shifts in supply and demand occur simultaneously, the overall effect on the equilibrium price and quantity depends on the relative magnitudes of these shifts. The final equilibrium results from the intersection of the new supply and demand curves.
For example, using a car market analogy, if a car manufacturer increases production, leading to a shift in the supply curve from So to S₂, we would expect to see more cars available for sale. If consumer demand slightly decreases at the same time, the new intersection point between supply and demand would lead to a larger quantity of cars sold at a lower price than before.
If the supply is inelastic, meaning it doesn't respond much to changes in price, then shifts in demand can have a larger effect on the equilibrium price than on quantity. In contrast, elastic supply would lead to greater changes in quantity compared to price, in response to demand shifts.