Question

A decrease in input costs in the production of LCD televisions caused the price of LCD televisions to decrease. Holding everything else​ constant, how would this affect the market for video game consoles​?
A) The demand for video game consoles would decrease and the equilibrium price of video game consoles would decrease.
B) The demand for video game consoles would decrease because consumers could afford to buy fewer LCD televisions and video game consoles.
C) The supply of video game consoles would increase and the equilibrium price of video game consoles would decrease.
D) The demand for video game consoles would increase and the equilibrium price of video game consoles would increase.

Answer 1

Answer:

The answer is C) The supply of video game consoles would increase and the equilibrium price of video game consoles would decrease.

Explanation:

If there are changes in production costs, the entire supply curve will shift. A shift in supply means a change in the quantity supplied at every price.A decrease in production costs will cause the supply curve to shift to the right ( increase in supply). The effect is shown in the diagram attached.