Exhibit 4-1 Supply and demand data
Price
Quantitydemanded
Quantitysupplied
$1.00
500
50
1.50
450
150
2.00
400
250
2.50
300
300
3.00
150
350
In Exhibit 4-1, suppose that a reduction in the price of an important input used to produce the good causes an increase in quantity supplied of 150 units at every price level. Assuming that demand does not change, the new equilibrium price will be:
A. $1.00.
B. $1.50.
C. $2.00.
D. $2.50.
Answer: C
Economics
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