Question

Equilibrium price in the peach market has decreased, but equilibrium quantity has stayed the same. Which of the following scenarios might explain this result?I. An increase in peach supply and a perfectly elastic peach demandII. An increase in peach supply and a perfectly inelastic peach demandIII. An increase in peach demand and a decrease in peach supply

Answer 1

Answer: (I.) An increase in peach supply and a perfectly elastic peach demand.

Step-by-step explanation:

Equilibrium price in the peach market has decreased, but equilibrium quantity has stayed the same. The following scenario is possible only when there is an increase in peach supply and a perfectly elastic peach demand.

This can be further explained using a graph: