PRC-3 · Chapter 10 · Question 42 of 70
Due to exceptionally favorable weather, a country produces double the normal harvest of cotton. Assuming demand remains strictly unchanged, what will happen to the market equilibrium?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Price will fall, but quantity exchanged will rise
Explanation
An exceptionally good harvest shifts the supply curve to the right. This excess supply pushes the equilibrium price down, which subsequently induces a higher quantity demanded.
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