A firm with market power has an inverse demand curve of P = 450 – 5Q and marginal cost of MC = 40Q, where Q is measured in thous
1 answer:
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Answer:
The correct answer is option d.
Explanation:
An increase in the supply of a product will cause the supply curve to shift to the right. This rightward shift will cause the demand curve and supply curve to intersect at a lower price.
This will cause the quantity demanded of the product to increase and the price of the product to decrease.
A decrease in the supply will cause the quantity demanded to decrease and price to increase.
The effect of supply increase is indicated through the given figure.
