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Eesource X is necessary to the production of good Y. If the price of resource X falls, the equilibrium price of Y will uantity of Y will and the equilibrium O a. fall; rise Ob. fall; fall C. rise; rise O d. rise; fall

Eesource X is necessary to the production of good Y. If the price of resource X falls, the equilibrium price of Y will uantity of Y will and the equilibrium O a. fall; rise Ob. fall; fall C. rise; rise O d. rise; fall

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Resource X is necessary to the production of good Y. If the price of resource X falls, the equilibrium price of Y will quantity of Y will and the equilibrium O a. fall; rise O b. fall; fall O c. rise; rise d. rise; fall
Transcribed Image Text:Resource X is necessary to the production of good Y. If the price of resource X falls, the equilibrium price of Y will quantity of Y will and the equilibrium O a. fall; rise O b. fall; fall O c. rise; rise d. rise; fall
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Step 1

Resource X is used for the production of good Y. Fall in the price of resource X leads to fall in price of inputs and hence, cost of production falls.

Fall in cost of production leads to increase in supply of good Y and Increase in supply leads to rightward shift in supply curve.

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