What is the effect of an increase in the price of resources?
A)It will cause a decrease in the quantity supplied.
B)It will cause an increase in demand.
C)It will cause a decrease in demand.
D)It will cause an increase in supply.
E)It will cause a decrease in supply.

Question

Quizplus · Accepted Answer

An increase in the price of resources will increase the cost of production, which will lead to a decrease in the profit margin for producers. As a result, producers will reduce the quantity of goods they supply to the market, leading to a decrease in supply. Therefore, the correct choice is E, an increase in the price of resources will cause a decrease in supply.

What Is the Effect of an Increase in the Price