ECONOMICS (CBSE/UGC NET)

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ECONOMICS

SUPPLY

Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
Some of the scare resources needed in producing double cheeseburgers come from cows (beef, milk). So when cattle prices rise due to Mad Cow disease, this will negatively impact supply. Which is correct about double cheeseburgers?
A
Supply decreases due to an increase in the cost of inputs
B
Supply increases due to a decrease in the cost of inputs
C
Either A or B
D
None of the above
Explanation: 

Detailed explanation-1: -Answer and Explanation: An outward shift in the supply curve represents an increase in supply. This can be due to an improvement in the technology which makes the production process more efficient and cheaper hence increasing the supply.

Detailed explanation-2: -The law of supply says that a higher price will induce producers to supply a higher quantity to the market. Because businesses seek to increase revenue, when they expect to receive a higher price for something, they will produce more of it.

Detailed explanation-3: -A change in quantity supplied is a movement along the supply curve in response to a change in price. A change in supply is a shift of the entire supply curve in response to something besides price.

Detailed explanation-4: -So, if the number of producers in the market increase, market supply will increase.

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