Question

The cost of fertilizer, a key input in wheat production (which is then used to make bread and other wheat products), rises. What happens to the supply of wheat? *
2 points
a. Quantity supplied increases
b. Quantity supplied decreases
c. Supply increases
d. Supply decreases

Answer 1

Answer:

The correct answer is - D. supply decreases.

Explanation:

If any ingredient or factor can affect the production of the good or service by changing its price then the final price of the product will also change. In this case, the cost of fertilizer rises then the price of wheat also be increase as it is a key factor for the production of wheat.

This increase in price will lead to decreases in the demand in the market. As the law of demand and supply states, here also decrease in demand will lead to a decrease in the supply as well.