Resource X is necessary to the production of good Y.If the price of resource X rises,the _____________ curve for good Y will shift ____________ resulting in a(n)_____________ in the equilibrium price of Y and a(n)____________ in the equilibrium quantity of Y.
A) supply; rightward; decrease; increase.
B) demand; leftward; decrease; decrease
C) demand; rightward; increase; increase
D) supply; leftward; increase; decrease
E) supply; leftward; increase; increase

Question

Quizplus · Accepted Answer

If the price of resource X rises, the cost of production for good Y also increases. This means that firms will supply less of good Y at each price level, causing a leftward shift in the supply curve for good Y. The equilibrium price will increase due to the decrease in supply, and the equilibrium quantity will decrease due to the higher price. This is represented by choice D.

Resource X Is Necessary to the Production of Good Y