Last year a firm made 1,000 units of its good available at a price of $5 per unit. This year, the firm will still make 1,000 units available, but only if the price is $7 per unit. What has most likely happened?

Question

Quizplus · Accepted Answer

The firm has decided to supply the same quantity of goods as last year but at a higher price, which suggests that the supply has decreased. The price change may be due to an increase in the cost of production or a change in the market conditions. The information provided does not give any indication of changes in demand or quantity supplied.

Last Year a Firm Made 1,000 Units of Its Good