Krugman's Economics For The Ap® Course
3rd Edition
ISBN: 9781319113278
Author: David Anderson, Margaret Ray
Publisher: Worth Publishers
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Question
Chapter 7, Problem 4MCQ
To determine
The factor that causes the
Expert Solution & Answer
Explanation of Solution
The equilibrium price of good X will increase in two possible cases:
- When
demand will increase - When supply will fall
When the price of machinery used in the production of good X falls, the input costs of suppliers reduce and cause the supply of good X to increase in the market.
In the given events, an increase in the price of machinery will cause the supply of good X to increase which results in a higher equilibrium price of product X.
Option “b” is correct.
Chapter 7 Solutions
Krugman's Economics For The Ap® Course
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