Question

An increase in the price of inputs will cause the equilibrium price to ______ and the equilibrium quantity to ______.a. increase; increaseb. increase; decreasec. decrease; decreased. decrease; increase

Answer 1

Answer:

b. increase; decrease

Explanation:

As the input prices increase, the firms average cost will increase as well, this will make the equilibrium point move as the supply curve will shift  to the left.

This movement will met the demand curve at a higher price and therefore, a lower quantity as the consumer demands decreases when the price of a certain good increase and move a portion of his consumption to other goods whch now has a lower opportunity cost.