The chain of effects of this change can be summarised as under:
Reduction in prices of inputs lowers the cost of production.
Revenues remaining unchanged, profits increase.
Increase in profits induces the producers to supply more.
Demand remaining unchanged, excess supply emerges.
This leads to competition among sellers because they are not able to sell as they want to sell.
As a result, price starts falling.
Due to fall in price, demand expands and supply contracts till demand equals supply, creating new equilibrium at a lower price.
