New safety regulations increase manufacturers’ costs of producing insulation. What happens in the market for insulation as a result?
A. The demand weakens as buyers refuse to bear the higher production costs.
B. The supply decreases, resulting in a higher equilibrium price and lower equilibrium quantity.
C. Both supply and demand decrease, resulting in less insulation being bought and sold.
D. The supply increases as manufacturers attempt to use higher sales to offset their lower profit margins.