Suppose the price of chocolate chips increases. The producers of chocolate chip cookies will now supply _____ at each price because _____.
A) more; some of their competitors will drop out of the market
B) less; the price of a main input has gone up
C) more; the price of a main input has gone up
D) more; more competitors will enter the market

Question

Quizplus · Accepted Answer

When the price of a main input, in this case chocolate chips, increases, the cost of producing chocolate chip cookies goes up. This reduces the profitability of making these cookies and therefore the producers will supply less at each price.

Suppose the Price of Chocolate Chips Increases