Which of the following factors causes a decrease in supply?
A) a decrease in demand
B) a decrease in the price of the product
C) an increase in the price of the product
D) new taxes on output

Question

Quizplus · Accepted Answer

New taxes on output increase the cost of producing goods and services, thereby decreasing the incentive for producers to supply them. This results in a decrease in supply. Option A is incorrect because a decrease in demand leads to a decrease in quantity demanded, not a decrease in supply. Option B is incorrect because a decrease in price generally leads to an increase in demand, not a decrease in supply. Option C is incorrect because an increase in the price of a product generally leads to an increase in supply, not a decrease in supply.

Which of the Following Factors Causes a Decrease in Supply