What would happen to the equilibrium price and quantity of shirts if the price of cotton decreases and all else is held constant?
A) The price falls and the quantity rises.
B) The price rises and the quantity falls.
C) The price falls and the quantity falls.
D) The price rises and the quantity rises.
E) The price falls and the quantity remains constant.

Question

Quizplus · Accepted Answer

A decrease in the price of cotton, a key input in shirt production, would lower production costs for manufacturers. This would likely lead to an increase in supply, causing the equilibrium price to fall and the equilibrium quantity to rise as more shirts are produced and sold at a lower price.

What Would Happen to the Equilibrium Price and Quantity of Shirts