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Homework answers / question archive / Which of the following scenarios will not cause an increase in supply? A
Which of the following scenarios will not cause an increase in supply?
A. Technology improves and drives down costs.
B. The number of suppliers increases.
C. Subsidies are given to the producers of the goods.
D. The wages for workers used to produce a good decrease.
E. The price of the good or service decreases.
The only scenario that would not cause an increase in supply is the decrease in the price of the good or service. This is based on the law of supply which states that there is a positive relationship between the price of a good and the quantity of a good that suppliers are willing to offer in the market. That is to say, the higher the price, the greater the quantity that suppliers are willing to offer in the market. Therefore, a decrease in price will decrease the quantity offered by suppliers. So the correct answer is option E. On the other hand, options A. and D. help suppliers to decrease production costs and to have more capital to invest in production and supply. Option B. also increases the total market supply since now there are more sellers offering a good or service. Option C. are government tools used to help producers increase the quantity supplied in the market.
