Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
The supply of bandanas will increase, leading to lower prices for consumers.
B
The supply of bandanas will decrease, causing prices to rise.
C
The supply of bandanas will stay the same, regardless of input costs.
D
The supply of bandanas will decrease, but prices will remain unchanged.
Understanding the Answer
Let's break down why this is correct
Answer
When the cost of fabric used to make bandanas decreases, it becomes cheaper for manufacturers to produce them. This lower cost means that companies can make more bandanas without spending as much money, which encourages them to increase their production. As a result, the overall supply of bandanas in the market is likely to rise because more bandanas can be made and sold. For example, if a company usually makes 1,000 bandanas but now can produce 1,500 at the same cost, this increase in supply can help meet more customer demand. In summary, lower input costs like fabric generally lead to an increase in the supply of the finished product.
Detailed Explanation
When the cost of fabric goes down, it costs less to make bandanas. Other options are incorrect because Some might think that lower costs mean less supply; It's a common mistake to think supply stays the same no matter what.
Key Concepts
Input Costs
Supply
Consumer Surplus
Topic
Impact of Input Costs on Supply
Difficulty
easy level question
Cognitive Level
understand
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