Question

Matthew bakes apple pies that he sells at the local farmer’s market. If the price of apples increases, the a. supply curve for Matthew’s pies will decrease. b. demand curve for Matthew’s pies will decrease. c. supply curve for Matthew’s pies will increase. d. demand curve for Matthew’s pies will increase.

Answer 1

Answer:

The answer is: B) demand curve for Matthew’s pies will decrease.

Explanation:

When the cost of a production input increases, the supplier faces higher production costs. Apples are a key input used to produce apple pies, and an increase in the price of apples will increase Matthew's production costs.

If the production costs increase, producing the good or service becomes less profitable, reducing the supply of that good or service. Since Matthew will earn less money from baking apple pies, he is likely to decrease the quantity of apple pies he bakes.

A decrease in the supply will shift the supply curve to the left.