Question

suppose that after a change in determining factors, the market-clearing price falls as the equilibrium quantity rises. which of the following could have occurred?

a)there was an increase in the price of a complement

b)there was a reduction in the number of firms that produce the good

c)there was an increase in the number of consumers

d)there was a decrease in the input price of the good

Answer 1

The correct option is (D) there was a decrease in the input price of the good.

As the price of inputs falls, firm will produce more this raises the supply curve. The supply curve shift to right, this decreases price level and increases the quantity level in the market.

Other options are wrong because:

Option A will reduce the demand which decreases price and quantity

Option B reduces the supply which raises price and increases quantity

Option C will raise the demand which causes price and quantity to rise.