Final answer:
In the market for capital equipment, if the market price of firms' output decreases, the equilibrium quantity of capital equipment will decrease, as firms have less incentive or ability to invest in capital equipment. This is consistent with the effects of a decrease in demand in different cost structures of industries. Therefore correct option is B
Step-by-step explanation:
When considering the market for capital equipment and the scenario where the market price of firms' output decreases, we must analyze how this affects the demand for capital equipment. Holding all else constant, this decrease in output price should lead to a decrease in firms' revenue, thus reducing their willingness or ability to invest in capital equipment. Therefore, the equilibrium quantity of capital equipment will decrease, since lower output prices lead to a contraction in firms' investment demand for capital equipment.
In terms of the adjustment process in constant-cost, increasing-cost, and decreasing-cost industries, a decrease in the market price of output is akin to a decrease in demand for capital equipment. In a constant-cost industrythis might mean that the quantity adjusts without a significant price change; however, in reality, with the decrease in demand for capital equipment (investment goods), we would expect the quantity to decrease.