Question

Suppose that lower production costs increases the supply of wheat, such that more wheat is supplied at each price level. After the increase in supply, the equilibrium quantity _____.

Answer 1

Equilibrium quantity Increase

Step-by-step explanation:

Equilibrium quantity is the level of supply that's meet the market demand of a product. At equilibrium quantity, there is no excess supply nor shortage in quantity supplied.

Should the cost of producing wheat decline, farmers will supply more wheat in the market. An increase in supply without a corresponding increase in demand results in reduced prices. Many suppliers will complete with few buyers. Due to a decline in prices, the equilibrium quantity increases because farmers will sell more quantities at the new low prices. The supply and demand curves will intersect a higher position in the graph, reflecting the new point where increased supply meets the demand at lower prices.