When a sharp increase in supply is generated, what is the likely outcome?

When there is a sharp increase in supply, it typically leads to a significant fall in price due to the basic principles of supply and demand. As the supply curve shifts to the right, the market becomes saturated with more goods available than before. This surplus causes sellers to compete by lowering prices to attract buyers, which generally results in a decreased price level in the market.

While the quantity of goods available for sale increases, the price decline can be significant enough that the overall quantity demanded may not change drastically, especially in the short term. Therefore, even though the supply has increased, the primary and notable outcome is the significant fall in price.

This option reflects the economic principle that, in an oversupplied market, price falls to encourage demand, while the quantity may only increase slightly or remain relatively stable in response to the price change, depending on consumer preferences.