Market for a good is in equilibrium. There is increase in supply for this goods. Explain the chain of effects of this change. Use diagram.
Or
How will equilibrium price and quantity be affected when there is increase in supply?
Or
Explain the chain effect of increase in supply of a good on its price, supply and demand. Use diagram.
Or
How does an increase in supply of a commodity affect its equilibrium price and equilibrium quantity? Explain with the help of a diagram.
Or
Market for a good is in equilibrium. Supply of the good 'increases'. Explain the chain of effects of this change .

Explanation

As given in the examination problem that market for a good is in equilibrium. So, we assume that initial price is OP as shown in given figure.
In the given figure price is on vertical axis and quantity demanded and supplied is on horizontal axis. But due to increase in supply the supply curve shifts rightward from SS to `S_(1)S_(1)`. With new supply curve `S_(1)S_(1)` there is excess supply at initial price OP because at price OP, supply is PB and demand is PA, so there is excess supply of AB at price OP. Due to this excess supply competition among the producer will make the price fall. Due to this fall in price there is downward movement along the supply curve (Contraction in supply) from B to C and similarly, there is downward movement along the demand curve (Expansion in demand) from A to C. So, finally, equilibrium price falls from OP to `OP_(1)` and equilibrium quantity rises from OQ to `OQ_(1)`.
conclusion
Due to increase in supply,
(i) Equilibrium price falls from OP to `OP_(1)`.
(i) Equilibrium quantity rises from OQ to `OQ_(1)`
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