suppose that there is a significant decline in the price of iron ore(used in making steel). What would happen to the equilibrium price and quantity of steel?

Question

anonymous · Answer

Since the production cost will be decreased due to decline in the price of iron ore, there will be an increase in supply . So, the supply curve shifts downward whereas the demand curve remains as it is resulting in an new equilibrium point with decreased price and increased quantity. 

Please refer to the attached diagram to see what happens when there is a shift in curve(s) -- demand or supply or both.

Hope this helps.