Final answer:
The supply of product X will increase if the price of a resource used to produce it falls because it lowers production costs and allows for an increased production quantity at competitive prices.
Step-by-step explanation:
All else held constant if the price of a resource used to produce product X falls, the supply of product X will increase. This is because the decrease in the cost of production allows producers to offer more of the product at the same price points, or they can offer it at lower prices, stimulating production. In the context of market equilibrium, it's crucial to understand how changes in supply and demand affect the equilibrium price and quantity.
In general, an increase in demand causes the equilibrium price and quantity to rise as the demand curve shifts to the right. Conversely, a decrease in demand leads to a fall in both equilibrium price and quantity when the demand curve shifts to the left.
For supply, an increase in supply, such as when the cost of inputs falls, leads to a decrease in the equilibrium price but an increase in the equilibrium quantity. This occurs as the supply curve shifts to the right. A decrease in supply results in a higher equilibrium price and a lower equilibrium quantity due to the leftward shift of the supply curve.