An increase in the price of input used to produce a product will lead to
A) a decrease in the demand for that product.
B) a decrease in quantity supplied of that product
C) a decrease in the supply of that product.
D) an increase in the supply of that product.

Question

Quizplus · Accepted Answer

An increase in the price of input used to produce a product will increase the cost of production, thereby reducing the profitability of producing that product. This, in turn, will lead to a decrease in the supply of that product, as the producers would cut back on production or may exit the market altogether.

An Increase in the Price of Input Used to Produce