With a downward sloping demand curve and an upward sloping supply curve for a product, a decrease in resource prices will:

Question

Quizplus · Accepted Answer

When the resource prices decrease, this shifts the supply curve to the right, which leads to a decrease in price and an increase in quantity demanded. This is because with lower resource prices, firms can produce more of the product at the same cost, so they are willing and able to supply more at any given price. The decrease in cost of production leads to a decrease in the price of the product to the consumer, and as this lower price stimulates more demand from consumers, the quantity demanded increases. Therefore, the equilibrium point moves along the demand curve to a new point with a lower price and higher quantity, which satisfies both consumers and producers.

With a Downward Sloping Demand Curve and an Upward Sloping