Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
Demand for pizza will decrease
B
Price of pizza will increase
C
Consumer surplus will potentially increase
D
Quantity of pizza sold will stay the same
Understanding the Answer
Let's break down why this is correct
Answer
When the cost of ingredients for making pizza goes down, pizza makers can produce more pizzas because it costs them less to make each one. This means they are willing to supply more pizzas to meet demand, as they can still make a profit even at lower prices. For example, if cheese and flour become cheaper, a pizzeria can make more pizzas without raising prices, attracting more customers. In this case, if A is the cost of ingredients and B is the supply of pizza, then C would be the demand for pizza. So, if the cost of ingredients decreases (A), the supply of pizza increases (B), which can lead to an increase in demand for pizza (C).
Detailed Explanation
When the cost to make pizza goes down, more pizzas can be made. Other options are incorrect because Some might think that if prices drop, fewer people want pizza; It's a common mistake to think lower costs lead to higher prices.
Key Concepts
Impact of Input Costs on Supply
Supply and Demand Dynamics
Consumer Behavior
Topic
Impact of Input Costs on Supply
Difficulty
medium level question
Cognitive Level
understand
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