Consider the Following Scenario: a New Manufacturing Process Is Introduced

question 144

Multiple Choice

Consider the following scenario: a new manufacturing process is introduced to make hockey skates. The new process is more efficient, lowers the cost of producing hockey skates, and allows more firms start producing hockey skates. At the same time, more individuals prefer hockey as a leisure activity and hockey league registration fees have gone down. What will happen to the equilibrium price and quantity?

• A) price will fall and the effect on quantity is ambiguous
• B) price will rise and the effect on quantity is ambiguous
• C) quantity will fall and the effect on price is ambiguous
• D) quantity will rise and the effect on price is ambiguous

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