Question

1

The diagram shows the market for fresh fish in the Caribbean with equilibrium point X. New, more efficient boats with lower running costs are then used.
Which point represents the new equilibrium?

Answer 1

Point C

Diagram is available online but cannot be imported due to its format

Step-by-step explanation:

A reduction in the cost of inputs means that suppliers will avail more fish in the market. An increase in supply caused by other factors other than price shifts the supply to the right. A shift of the supply curve outwards or the right makes the equilibrium point to move to capture an increase in supply.

In the diagram, the new equilibrium point will be at point C. The supply will increase due to a reduction in input costs.