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Question

If the demand curve for a good is horizontal and the price is positive, then a leftward shift of the supply curve results in _________.

A
price changing to zero
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B
an increase in price
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C
a decrease in price
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D
no change in price
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Solution

The correct option is D no change in price
If the demand curve for a good is horizontal and price is positive, a leftward shift of the supply curve results in no change in the price of the commodity but would change the quantity. When there is a leftward shift of supply curve there is a fall quantity supplied.

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