ECONOMICS
SUPPLY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Decreased marginal cost
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Higher revenues
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Lower supply
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Reduced profits
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Detailed explanation-1: -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-2: -Marginal cost is the cost of producing an additional unit of a good or service. Generally, marginal cost rises on each successive unit produced. Because of this, a producer is willing to increase production only if he or she receives a higher price for the additional units produced.
Detailed explanation-3: -An increase in input prices will cause a leftward shift in the positively sloped portion of the aggregate supply curve.
Detailed explanation-4: -Marginal Cost as the Supply of Output Restated, as the price of the output (MR) rises or falls, profit maximizing quantity of output (where MR = MC) also rises and falls.