If the company decides to add new product lines to their range of oatcakes, they will increase the supply at each possible market price by 2,000 boxes of oatcakes per year.

• Draw and label the new supply curve on the diagram that you have constructed in question 3.
• Explain how market forces would act to return the market to a state of equilibrium at the new equilibrium position.
• Identify the new equilibrium price and quantity.

(9 Marks Available)