Which of the following will NOT cause market supply to increase?
A) an increase in the number of firms supplying the product in the market
B) a change in technology which allows a larger level of production at every price
C) an increase in the costs of resources used to produce the product
D) a decrease in labor costs

Question

Quizplus · Accepted Answer

An increase in the costs of resources used to produce the product will result in a decrease in market supply, as firms will face higher costs of production and will be less willing and able to produce the same quantity of output at every price. A, B, and D will all cause an increase in market supply, as they will either increase the quantity of output produced by existing firms (A and B) or enable firms to produce the same quantity of output at a lower cost (D).

Which of the Following Will NOT Cause Market Supply to Increase