If there is a decline in the price of milk, an input in the production of ice cream, then there will be a(n)
A) decrease in the supply of ice cream and a leftward shift of the supply curve.
B) decrease in the quantity of ice cream supplied and a movement up along the supply curve.
C) increase in the supply of ice cream and a rightward shift of the supply curve.
D) increase in the quantity of ice cream supplied and a movement down along the supply curve.

Question

Quizplus · Accepted Answer

A decline in the price of milk, an input in the production of ice cream, would decrease the cost of production for ice cream producers. As a result, ice cream producers would be willing and able to supply more ice cream than before at each price level. This would cause an increase in the supply of ice cream and a rightward shift of the supply curve.

If There Is a Decline in the Price of Milk