Question

Which of the following lists only the factors that would cause a decrease in the supply of an item? A. A fall in input prices; an increase in productivity, a fall in the price of a substitute-in-production. B. A rise in the price of a substitute-in-production; a rise in the price of a complement-in-production; an expectation that the price of the item will rise in the future. C. A decrease in the number of sellers in the market; a fall in the price of a complement-in-production; an increase in productivity. D. A rise in input prices, a decrease in the number of sellers in the market; a rise in the price of a substitute-in-production.

Answer 1

Answer: d) a rise in input prices; a decrease in the number of sellers in the market; a rise in the price of a substitute in production.

Explanation:

Supply simply has to do with the amount of goods that a particular producer is willing to sell to economic agents at a particular price and at a given time.

It should be noted that rise in input prices; a decrease in the number of sellers in the market; a rise in the price of a substitute in production would cause a reduction in supply of goods and services.

This is because when the number of sellers reduce, the supply will also reduce as there are lesser people supplying the goods. Also, when the prices of input increases, it affects cost and supply reduces.

Therefore, the correct option is D.