Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
It makes supply more elastic as producers can easily adjust output.
B
It makes supply less elastic as producers may produce less at higher costs.
C
It has no effect on the elasticity of supply.
D
It increases the quantity supplied regardless of price changes.
Understanding the Answer
Let's break down why this is correct
Answer
When input costs increase, it usually makes it more expensive for producers to create their products. This can lead to a decrease in supply because some businesses may not be able to afford to produce as much as they did before. In a competitive market, if the supply decreases, prices may go up, which can affect how much consumers are willing to buy. For example, if a bakery faces higher flour prices, it might bake fewer loaves of bread, leading to fewer choices for customers and potentially higher prices. Overall, higher input costs can make supply less elastic, meaning it doesn't change as easily in response to price changes.
Detailed Explanation
When input costs go up, producers have to spend more money to make their products. Other options are incorrect because Some might think that higher costs make it easier to adjust output; It's a common belief that input costs don't affect supply elasticity.
Key Concepts
elasticity of supply
economic factors
Topic
Impact of Input Costs on Supply
Difficulty
medium level question
Cognitive Level
understand
Ready to Master More Topics?
Join thousands of students using Seekh's interactive learning platform to excel in their studies with personalized practice and detailed explanations.