EPF Supply and Demand Basics Practice Test

The correct choice indicates that the equilibrium price will typically decrease if the supply curve shifts right while demand remains the same.

When the supply curve shifts to the right, it signifies an increase in the quantity of goods available in the market. This increase could result from various factors, such as technological improvements, a decrease in production costs, or an increase in the number of suppliers. With more goods available and no corresponding increase in demand, the surplus of goods places downward pressure on the price. Therefore, the equilibrium price, which is determined by the intersection of the supply and demand curves, will fall as suppliers adjust their prices to sell the increased quantity of goods.

This concept relies on the fundamental principle of supply and demand, where an increase in supply (with demand constant) leads to lower prices because the market has more of the good than consumers are willing to buy at previous price levels.