Which of the following increases the supply of a good?
A) The price of a complement in production decreases.
B) Producers expect higher prices for the good in the future.
C) Productivity improves.
D) Prices of inputs used to produce the good rise.
E) The number of producers decreases.

Question

Quizplus · Accepted Answer

When productivity improves, producers are able to produce more of the good with the same amount of inputs, which increases the supply of the good.

Note: A decrease in the price of a complement in production (Option A) and higher expected future prices for the good (Option B) do not directly affect the quantity of the good that producers are able to supply in the present. In fact, if producers expect higher future prices, they may actually decrease supply in the short term to take advantage of higher profits later. An increase in input prices (Option D) decreases profit margins for producers, which may lead them to decrease supply of the good. A decrease in the number of producers (Option E) also decreases supply.

Which of the Following Increases the Supply of a Good