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Which of the following will cause a decrease in the supply of jeans? a
Which of the following will cause a decrease in the supply of jeans?
a. An increase in the wages paid to workers who make jeans
b. A decrease in the demand for jeans
c. A decrease in the price of jeans
d. A decrease in the expected future price of jeans
Expert Solution
(a.) An increase in the wages paid to workers who make jeans will cause a decrease in the supply of jeans.
An increase in the wages paid to workers who make the jeans in turn increases the production cost of jeans. Thus, at each price, sellers are willing to sell fewer jeans (a smaller quantity and decrease in the supply) as a result. A decreased in demand for jeans has no effect on supply in the short-run. A decrease in the price of jeans is a movement along the supply or demand curve and doesn't shift anything. A decrease in the expected future price of jeans increased supply.
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