GENERAL KNOWLEDGE

Detailed explanation-1: -Government policies can affect the cost of production and the supply curve through taxes, regulations, and subsidies. For example, the U.S. government imposes a tax on alcoholic beverages that collects about $8 billion per year from producers.

Detailed explanation-2: -The supply a good decreases if the price of one of its complements in production falls. Resource and input prices influence the cost of production. And the more it costs to produce a good, the smaller is the quantity supplied of that good. Expectations about future prices influence supply.

Detailed explanation-3: -Factors that can cause a decrease in supply include higher production costs, producer expectations and events that disrupt supply. Higher production costs make supplying a product less profitable, resulting in firms being less willing to supply the good.

Detailed explanation-4: -Answer and Explanation: A decrease in the price level will decrease the short-run aggregate supply only. This is because when the prices are reduced, the producers following the law of supply will decrease the amount they offer in the market.