The price of microchips used to produce computers falls.As a result,the equilibrium price of computers _____ and the equilibrium quantity _____.
A)rises;increases
B)rises;decreases
C)falls;decreases
D)falls;increases

Question

Quizplus · Accepted Answer

When the price of microchips used to produce computers falls, it reduces the cost of production of computers, which causes an increase in the supply of computers. This increase in supply shifts the supply curve to the right, causing a decrease in the equilibrium price and an increase in the equilibrium quantity of computers. Therefore, the best choice is D, which states that the equilibrium price of computers falls and the equilibrium quantity of computers increases.

The Price of Microchips Used to Produce Computers Falls