Use the Following to Answer Questions

Multiple Choice

Use the following to answer questions:
Figure: Demand, Supply Shifts
-(Figure: Demand, Supply Shifts) In the figure, the initial demand curve is D₁ and the initial supply curve is S₁. If technological innovations lower the costs of production, what will happen?

A) D₁ will shift to D₃ and equilibrium price and equilibrium quantity will increase.
B) S₁ will shift to S₂ and equilibrium price will increase but equilibrium quantity will decrease.
C) D₁ will shift to D₂ and equilibrium price and equilibrium quantity will decrease.
D) S₁ will shift to S₃ and equilibrium price will decrease but equilibrium quantity will increase.