Suppose a competitive market has a downward-sloping demand curve and a horizontal supply curve.If the supply curve shifts downward,equilibrium price will _____,equilibrium quantity will _____,consumer surplus will _____,and producer surplus will _____.
A)decrease;increase;increase;decrease
B)decrease;decrease;increase;not change
C)decrease;increase;increase;not change
D)decrease;increase;not change;increase

Question

Quizplus · Accepted Answer

In this scenario, a downward shift in the supply curve indicates a decrease in the cost of production or an increase in supply. This leads to a decrease in equilibrium price and an increase in equilibrium quantity. Consumer surplus increases because consumers are paying less for more goods. Producer surplus does not change because the horizontal supply curve suggests that producers are perfectly competitive and are price takers, making their surplus dependent on their production costs and output rather than the price.

Suppose a Competitive Market Has a Downward-Sloping Demand Curve and a Horizontal