question archive Suppose that the own price elasticity of market demand for good 1 is -2
Suppose that the own price elasticity of market demand for good 1 is -2
Subject:MarketingPrice:2.88 Bought3
Suppose that the own price elasticity of market demand for good 1 is -2. Suppose that the supply of good 1 increases by 4%. Consumer incomes and the prices of all other goods remain the same.
What would we expect to happen to the price of good 1?
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If the supply of the good increases, it means that the supply curve has shifted to the right so that more is being supplied at all prices. Due to the rightward shift, the supply curve will meet the demand curve at a lower point. A lower point will mean lower prices.
