Select the phrase that correctly completes the following statement."An increase in input prices caused a decrease in the supply of baseballs.As a result ________."
A)the price of baseballs increased and the demand for baseballs decreased
B)the equilibrium quantity of baseballs increased
C)the price of baseballs increased and the quantity demanded of baseballs decreased
D)the price of baseballs increased. The higher price caused the supply of baseballs to increase

Question

Quizplus · Accepted Answer

When input prices increase causing a decrease in supply, it results in an increase in price and a decrease in quantity demanded. Therefore, choice C correctly completes the statement. Choice A is incorrect because an increase in price would not cause a decrease in demand (the law of demand states that an increase in price results in a decrease in quantity demanded). Choice B is incorrect because a decrease in supply would lead to a decrease in the equilibrium quantity traded. Choice D is incorrect because the statement clearly states that an increase in input prices caused a decrease in supply, so it is not possible for the supply to increase as a result of higher prices.

Select the Phrase That Correctly Completes the Following Statement