Suppose That Market Demand for a Good Slopes Downward and Market

question 30

Multiple Choice

Suppose that market demand for a good slopes downward and market supply slopes upward. Equilibrium price is now $10 and 500,000 units of the good are traded at this price. Suppose now that the cost at which each unit of the good is produced falls. What is the likely effect of this change on the market equilibrium?

• A)Excess supply
• B)A fall in price
• C)A shift in demand to the right
• D)An increase in price

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