using the supply and demand curve, which statement is true?\na by decreasing the price from $3.50 (p1) to…

using the supply and demand curve, which statement is true?\na by decreasing the price from $3.50 (p1) to $1.60 (p2), supply decreases.\nb by decreasing the price from $3.50 (p1) to $1.60 (p2), demand decreases.\nc by decreasing the price from $3.50 (p1) to $1.60 (p2), the quantity of supply decreases.\nd by decreasing the price from $3.50 (p1) to $1.60 (p2), the quantity of demand decreases.

using the supply and demand curve, which statement is true?\na by decreasing the price from $3.50 (p1) to $1.60 (p2), supply decreases.\nb by decreasing the price from $3.50 (p1) to $1.60 (p2), demand decreases.\nc by decreasing the price from $3.50 (p1) to $1.60 (p2), the quantity of supply decreases.\nd by decreasing the price from $3.50 (p1) to $1.60 (p2), the quantity of demand decreases.

Answer

Brief Explanations:

The question asks to identify the true statement regarding the effect of a price decrease from $3.50 (P1) to $1.60 (P2) using the provided supply and demand curves. A change in price causes a movement along the supply and demand curves, referred to as a change in quantity supplied and quantity demanded, respectively. It does not cause a shift of the entire curves (which would be a change in supply or demand). According to the law of supply, a decrease in price leads to a decrease in the quantity supplied, as producers are less willing or able to produce at lower prices. This corresponds to moving down along the upward-sloping supply curve. According to the law of demand, a decrease in price leads to an increase in the quantity demanded, as consumers are willing and able to buy more at lower prices. This corresponds to moving down along the downward-sloping demand curve. Therefore, decreasing the price from $3.50 to $1.60 will cause the quantity supplied to decrease and the quantity demanded to increase. Option C correctly states that the quantity of supply decreases. Options A and B incorrectly refer to changes in supply and demand (shifts of the curves). Option D incorrectly states that the quantity of demand decreases.

Answer:

C. By decreasing the price from $3.50 (P1) to $1.60 (P2), the quantity of supply decreases.