A decrease in the price of a factor of production will lead to an increase in the supply of goods that use the factor in production.

Question

Quizplus · Accepted Answer

When the price of a factor of production decreases, the cost of producing goods that use the factor decreases, leading to an increase in the supply of those goods. This is because producers can now produce more of those goods at a lower cost, which will increase the quantity of those goods supplied to the market.

A Decrease in the Price of a Factor of Production