Exhibit 4-1 Supply and demand data In Exhibit 4-1, suppose that a reduction in the price of an important input used to produce the good causes an increase in quantity supplied of 150 units at every price level. Assuming that demand does not change, the new equilibrium price will be:

Question

Exhibit 4-1  Supply and demand data  In Exhibit 4-1, suppose that a reduction in the price of an important input used to produce the good causes an increase in quantity supplied of 150 units at every price level. Assuming that demand does not change, the new equilibrium price will be:

Quizplus · Accepted Answer

A decrease in input cost will increase the supply and shift the supply curve to the right, resulting in a lower equilibrium price. The increase in quantity supplied of 150 units at every price level indicates a shift of the supply curve by the same amount. Therefore, the new equilibrium price will be $2.00, as shown by the intersection of the new supply curve and the unchanged demand curve.

Exhibit 4-1 Supply and Demand Data in Exhibit 4-1, Suppose