) Assume that in the market for widgets, demand is highly elastic compared to supply. If...
) Assume that in the market for widgets, demand is highly elastic compared to supply. If input costs for producing widgets drop, what happens to equilibrium price and quantity? Explain.
Homework Answers
Ans) If input costs for producing widgets drop, the cost of production decreases so supply increases and shifts to the right. The equilibrium price decreases and equilibrium quantity increases.
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) Assume that in the market for widgets, demand is highly
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