An increase in the price of cotton will increase the equilibrium price and decrease the equilibrium quantity in the market for cotton t-shirts.

Question

Quizplus · Accepted Answer

An increase in the price of cotton, a key input in the production of cotton t-shirts, raises production costs for manufacturers. This typically leads to a decrease in supply (shift to the left in the supply curve) as producers are willing to supply less at any given price. The result is an increase in the equilibrium price due to the scarcity of supply and a decrease in the equilibrium quantity as the higher price reduces consumer demand.

An Increase in the Price of Cotton Will Increase the Equilibrium