Which events would unambiguously cause decrease in equilibrium

Subject : Biology

Question: Which of the following events would unambiguously cause a decrease in the equilibrium price of cotton shirts?

A) An increase in the price of wool shirts and a decrease in the price of raw cotton

B) A decrease in the price of wool shirts and a decrease in the price of raw cotton

C) An increase in the price of wool shirts and an increase in the price of raw cotton

D) A decrease in the price of wool shirts and an increase in the price of raw cotton

Expert Verified Solution:

The correct answer is:

B) A decrease in the price of wool shirts and a decrease in the price of raw cotton.

Explanation:

A decrease in the price of wool shirts (a substitute for cotton shirts) would likely reduce the demand for cotton shirts, as consumers may switch to the cheaper alternative (wool shirts).

A decrease in the price of raw cotton (an input for producing cotton shirts) would reduce the cost of producing cotton shirts, leading to an increase in supply.
When both of these events occur simultaneously — a decrease in demand (due to lower wool shirt prices) and an increase in supply (due to lower production costs) — the equilibrium price of cotton shirts would unambiguously decrease.