ECONOMICS
SUPPLY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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furniture prices rise
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six new companies begin producing furniture
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the price of necessary raw materials goes up
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there is no change in productive technology
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Detailed explanation-1: -When the product price increases, producers will have a higher incentive to produce more goods and services. This will lead to an increase in the supply of the good in question.
Detailed explanation-2: -An improvement in technology that reduces the cost of production will cause an increase in supply. Alternatively, you can think of this as a reduction in price necessary for firms to supply any quantity. Either way, this can be shown as a rightward (or downward) shift in the supply curve.
Detailed explanation-3: -If there is an increase in supply for goods and services while demand remains the same, prices tend to fall to a lower equilibrium price and a higher equilibrium quantity of goods and services.
Detailed explanation-4: -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.