Consider the market for capital equipment. Suppose the market price of firms' output increases. Holding all else constant, the equilibrium quantity of capital equipment will

Question

Quizplus · Accepted Answer

When the market price of firms' output increases, firms are likely to produce more to take advantage of the higher prices. To increase production, firms will demand more capital equipment, leading to an increase in the equilibrium quantity of capital equipment.

Consider the Market for Capital Equipment