If a producer obtains lower prices of resources to produce any given quantity of good, we can conclude that: (a) demand will increase (b) demand will decrease (c) supply will decrease (d) supply will increase (e) both demand and supply will increase

Economics Dec 13, 2020

If a producer obtains lower prices of resources to produce any given quantity of good, we can conclude that:

(a) demand will increase

(b) demand will decrease

(d) supply will increase

(e) both demand and supply will increase

Expert Solution

If a producer obtains lower prices of resources to produce any given quantity of good, we can conclude that (d) supply will increase.

If a producer obtains lower prices of resources to produce any given quantity of good, the cost of producing a unit of good will be lower. Therefore, at any given price, the producer will find it profitable to produce more units of a good, and hence increases the quantity of goods supplied. In other words, supply increases.

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