Question

Why does supply decrease when the price of resources increases?

Answer 1

Answer:

see below

Explanation:

Resources are the ( inputs) materials used in the production of goods meant for sale. The cost of inputs has a direct impact on the price of the finished goods(output).  An increase in the cost of inputs increases the cost of production. An increase in production cost increases without a corresponding rise in the selling price means that the profits margin per unit will decline.

Suppliers are motivated to sell or deliver more quantities in the market by profit prospects. An increase in the costs of inputs decreases profit margins. Reduced profits margin result in suppliers supplying reduced quantities in the markets.