The correct option is 2 and 3 only.
Explanation
An increase in the number of firms in a market affects market supply by altering the aggregate quantity that producers are willing to sell at each price.
Statement-wise Analysis:
- Statement 1 - Incorrect. An increase in the number of firms causes the market supply curve to shift to the right, not to the left, as more producers contribute to total supply.
- Statement 2 - Correct. A rightward shift of the supply curve, with demand remaining constant, leads to a fall in the equilibrium price of the commodity.
- Statement 3 - Correct. The expansion in supply results in an increase in the total equilibrium quantity produced and sold in the market.
Key Takeaway: Entry of more firms increases market supply, leading to a lower equilibrium price and a higher equilibrium quantity.