Question

Consider the market for economic textbooks. Explain whether the following event would cause an increase or decrease in supply or an increase or decrease in the quantity supplied.
a. The market price of paper increases. This will cause a(n)b. The market price of economics textbooks increases. This will cause a(n)c. The number of publishers of economics textbooks increases. This will cause a(n)d. Publishers expect that the market price of economics textbooks will increase next month. This will cause a(n)

Answer 1

Answer:

A. Decrease in supply

B. Increase in quantity supplied.

C. Increase in supply

D. Decrease in supply

Explanation:

If the price of paper increases, the cost of production increases and supply falls.

If the price of economics textbooks increases, the quantity supplied increases in line with the law of supply.

If the number of publishers increase, the supply would increase.

If there are expectations that prices would rise in the future, suppliers would decrease supply now and increase it in the future in order to earn a higher revenue.

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