A shift of the supply curve to the right indicates which of the following?

• A. An increase in demand
• B. An increase in supply, which results in a lower equilibrium price.
• C. A decrease in production costs
• D. A higher market price

Answer: (B)

A rightward shift in the supply curve means producers are willing to sell more at each price, so market supply increases. With demand held constant, this leads to a new equilibrium where the price falls and the quantity traded rises. Therefore, the statement describing an increase in supply and a lower equilibrium price is the best match. An increase in demand would shift the demand curve, not the supply curve, and while lower production costs can cause supply to grow, the shift is described by its effect (more supply and lower price) rather than the cause. A higher market price would result from a decrease in supply or an increase in demand, not from a rightward shift of supply.