Question

The initial equilibrium price in the market for Web pages is $200 per page and 1 created in a month. Many new Web design firms now enter the market. As a result, leftward and the price falls.
A) the supply curve of Web pages shifts l
B) the supply of Web pages increases and the price falls,
C) the supply of web pages increase and the price falls, which then increases the demand for Web pages and the demand curve shifts rightward.
D) the demand for Web pages increases and the price rises.
E) the demand for Web pages increases and the price falls.

Answer 1

Answer:

The supply of web pages increase and the price falls, which then increases the demand for web pages and the demand curve shifts rightward ( C )

Explanation:

If the equilibrium price of a web page is $200 when fewer web design firms are producing the web pages. the number of web pages will increase when more web design firms enter the market.

As more design firms go into producing more web pages the supply of web pages will be increase and this will lead to lower equilibrium price for the web pages in the market. based on this market factors the demand will increase because buyers would buy more when prices of goods and services fall. the increase in demand will be represented with the demand curve shifting to the right.

Answer 2

Answer:

B) the supply of Web pages increases and the price falls.

Explanation:

The equillibrum price is where demand intersects supply, that is the price at which consumer is willing to buy is the same as the price seller is willing to sell.

If there was only 1 web page created per month at $200, and now more web design firms enter the market. The supply of web pages will increase from 1, as all the companies will want to present their product.

This results in excess supply and will cause price to fall as is illustrated in the attached diagram. As seen the equillibrum price reduces from P1 to P2.