ECONOMICS
SUPPLY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Costs will drop, but supply will remain the same
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Supply and costs both decrease
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Costs will go down and supply will increase
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At first supply will rise and then decrease
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Detailed explanation-1: -Price is what the producer receives for selling one unit of a good or service. An increase in price almost always leads to an increase in the quantity supplied of that good or service, while a decrease in price will decrease the quantity supplied.
Detailed explanation-2: -If the price of inputs goes up, the cost of producing the good increases. And therefore at each price producers need to sell their good for more money. So an increase in the price of inputs leads to a decrease in supply. Simarly, a decrease in the price of inputs leads to an increase in supply.
Detailed explanation-3: -On most supply curves, as the price of a good increases, the quantity of goods supplied also increases. Supply curves can often show if a commodity will experience a price increase or decrease based on demand, and vice versa.
Detailed explanation-4: -New technology often has a positive effect on production because better equipment can produce more units per hour than outdated equipment. Quality may improve as well because a lot of technology has created machinery to be more precise during production.