Question:
Which of the following causes an increase in the quantity supplied of good X?
(1) An increase in the price of good X while other things remain unchanged.
(2) An increase in the price of good Y which is a complement in the production of good X.
(3) An improvement in the technology for producing good X.
(4) A reduction in the price of resources used to produce good X.
(5) A decrease in the demand for a substitute for good X.
Correct Answer:
(1)
Answer Explanation:
It is crucial to distinguish between an “increase in supply” (a shift of the entire curve due to factors like technology or resource prices) and an “increase in quantity supplied” (a movement up along the existing curve). Only a change in the product’s own price causes a change in quantity supplied.
Topic: Supply Theory Year: 2020
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