ECONOMICS
DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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A fall in price.
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An increase in production costs.
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A fall in labour productivity.
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A rise in the price of another good produced by the same company.
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Detailed explanation-1: -Contraction of supply – A contraction of supply occurs when the supply of a commodity reduces solely as a result of a decrease in the price of that commodity. The downward trend to the left on the same supply curve indicates contraction.
Detailed explanation-2: -Supply will increase until a market-clearing price is reached again. If prices fall, suppliers who are unable to cover their costs will drop out. Economists generally lump together the quantities suppliers are willing to produce at each price into an equation called the supply curve.
Detailed explanation-3: -The supply curve in economics slopes upwards, suggesting the positive relationship between price and the amount supplied. Factors affecting supply include price of goods, price of related goods, production conditions, future expectations, input costs, number of suppliers, and government policy.
Detailed explanation-4: -a. Price. Price can be understood as what the consumer is willing to pay to receive a good or service. b. Cost of production. The supply of a product and the cost of production is adversely related to each other. c. Technology. d. Governments’ policies. e. Transportation condition. 21-Oct-2021