Question

Which of the following would cause a decrease in supply of good? . A- the price of a complementary good decreases B- the price paid for a labor decreases c-the price of a substitute good increases D- the price of Key raw material increases

Answer 1

Answer:

D- the price of Key raw material increases

Explanation:

Supply is the size or quantity of goods and services that sellers are willing to avail to the market at a set price. By supplying products and services, suppliers satisfy a need in society and also make profits. As business people, suppliers will be happy to sell more when the profit margins are high.

An increase in the price of a key raw material increases the cost of production. Suppliers may lack sufficient resources to purchase the raw material at a high price, which decreases production. Again, the increased cost of production reduces the profits margin from the product. A reduction in profits margin makes a business unattractive to suppliers.

The other options decrease the cost of production, which results in a higher output.