Suppose we observe that both the equilibrium price of film cameras and the equilibrium quantity of film cameras have fallen. Which of the following could be responsible for this?

Question

Quizplus · Accepted Answer

A decrease in equilibrium price and quantity is a sign of a decrease in demand. This decrease in demand may be due to consumers' preferences changing in favor of digital cameras. Technological advances in film camera production (A) would lower the cost of production for film cameras, which would lead to an increase in the equilibrium quantity, not a decrease. Workers receiving a pay raise (C) would increase the cost of production, which could lead to an increase in price, not a decrease. The price of digital cameras increasing (D) would likely have no effect on the equilibrium price and quantity of film cameras.

Suppose We Observe That Both the Equilibrium Price of Film