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Suppliers of Chia Pets have reduced supply since the gift-giving season has passed
Suppliers of Chia Pets have reduced supply since the gift-giving season has passed. Suppliers are most likely responding to:
a. higher prices of clay, used to make Chia Pets.
b. a decrease in the number of suppliers of Chia Pets and similar products.
c. their expectation that the price of Chia Pets will fall in the marketplace.
d. a tax placed on Chia Pets.
Expert Solution
The correct option is c. their expectation that the price of Chia Pets will fall in the marketplace.
Explanation:
Given that, the supply of Chia Pets reduced when a gift-giving season has ended. It is the rational behavior of the supplier as they act by observing the economy. Chia Pets are highly demanded in the gift-giving season due to which suppliers supplied more in the economy. And the demand for Chia Pets decreases after this season due to which suppliers reduces the supply to maintain the price level in the economy. This movie explains the future expectation of the suppliers.
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