A decrease in supply is caused by:

Question

Quizplus · Accepted Answer

A decrease in supply is caused by a decrease in the number of sellers in the market. This could be due to businesses closing down, going bankrupt or exiting the market due to low profits or unfavorable market conditions. A decrease in resource prices (choice A) usually leads to an increase in supply as it reduces the cost of production. Suppliers' expectations of lower prices in the future (choice C) may lead to a decrease in supply as they hold back production in anticipation of better prices in the future. An advancement in technology for producing the good (choice D) would usually lead to an increase in supply, as it would reduce the cost of production and increase productivity.

A Decrease in Supply Is Caused By