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MACROECONOMICS


Question:


Which of the following statements is correct

An increase in the supply of coffee shifts the supply curve to the right. The equilibrium price falls to a new value. As the price falls to the new equilibrium level, the quantity of coffee demanded decreases to a new value.

An increase in the supply of coffee shifts the supply curve to the right. The equilibrium price raises to a new value. As the price raises to the new equilibrium level, the quantity of coffee demanded increases to a new value.

An increase in the supply of coffee shifts the supply curve to the left. The equilibrium price falls to a new value. As the price falls to the new equilibrium level, the quantity of coffee demanded increases to a new value.

An increase in the supply of coffee shifts the supply curve to the right. The equilibrium price falls to a new value. As the price falls to the new equilibrium level, the quantity of coffee demanded increases to a new value.