Question

The market for Good A is in equilibrium. If there is a decrease in the price of an input used to produce Good A, the impact on the market for Good A will be

•  A. a decrease in equilibrium price and a decrease in equilibrium quantity.
•  B. a decrease in equilibrium price and an increase in equilibrium quantity.
•  C. no change in equilibrium price but an increase in equilibrium quantity.
•  D. a decrease in equilibrium price but no change in equilibrium quantity.

Answer 1

B. a decrease in equilibrium price and an increase in equilibrium quantity.