Narrbegin Exhibit 4.1 Supply and demand data
$$\begin{array} { | c | c | c | }
\hline \text { Price (\$) } & \begin{array} { c }
\text { Quantity } \
\text { demanded }
\end{array} & \begin{array} { c }
\text { Quantity } \
\text { supplied }
\end{array} \
\hline 10 & 500 & 50 \
\hline 15 & 450 & 150 \
\hline 20 & 400 & 250 \
\hline 25 & 300 & 300 \
\hline 30 & 150 & 350 \
\hline
\end{array}$$
-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 300 units at every price level. Assuming that demand does not change, the new equilibrium price will be:
A) $10.
B) $15.
C) $20.
D) $25.

Question

Narrbegin Exhibit 4.1 Supply and demand data
 $$\begin{array} { | c | c | c | } 
\hline \text { Price (\$) } & \begin{array} { c } 
\text { Quantity } \
\text { demanded }
\end{array} & \begin{array} { c } 
\text { Quantity } \
\text { supplied }
\end{array} \
\hline 10 & 500 & 50 \
\hline 15 & 450 & 150 \
\hline 20 & 400 & 250 \
\hline 25 & 300 & 300 \
\hline 30 & 150 & 350 \
\hline
\end{array}$$ 
-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 300 units at every price level. Assuming that demand does not change, the new equilibrium price will be:
A) $10.
B) $15.
C) $20.
D) $25.

Quizplus · Accepted Answer

A decrease in the price of an input used to produce the good causes the supply curve to shift to the right, resulting in an increase in quantity supplied at every price level. Since the demand curve remains constant, the shift in the supply curve causes the equilibrium price to fall. The equilibrium quantity will increase since both the supply and demand have increased. In this particular scenario, the quantity supplied has increased by 300 units at every price level. Therefore, an increase in supply and constant demand will lead to lower prices, and the new equilibrium price will be $15 per unit.

Narrbegin Exhibit 4 -In Exhibit 4