The equilibrium market price of lead pencils would decrease and the quantity of pencils produced and sold would increase if:

Question

Quizplus · Accepted Answer

A decrease in the price of graphite, a key input in pencil production, would lower the cost of production for pencil manufacturers. As a result, firms would realize higher profit margins, which could incentivize them to lower the price of pencils, leading to an increase in the quantity of pencils produced and sold. None of the other options would have the same effect on the equilibrium market price and quantity of lead pencils.

The Equilibrium Market Price of Lead Pencils Would Decrease and the Quantity