Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
increase
B
decrease
C
stabilize
D
fluctuate
Understanding the Answer
Let's break down why this is correct
Answer
If the cost of fabric used to make bandanas goes down, it means that manufacturers can produce bandanas for less money. When production costs decrease, it becomes easier for companies to make more bandanas because they can earn a profit even at lower prices. As a result, the supply of bandanas will likely increase because more businesses will want to produce and sell them. This increase in supply can lead to a decrease in the market price of bandanas since there will be more available for consumers to buy. For example, if a bandana costs $5 to make and the fabric cost drops, companies might sell it for $3, making it more affordable for everyone.
Detailed Explanation
When the cost of fabric goes down, it becomes cheaper to make bandanas. Other options are incorrect because Some might think that lower costs mean less supply; Stabilizing means no change, but lower costs usually lead to more supply.
Key Concepts
Impact of Input Costs on Supply
Supply and Demand Dynamics
Consumer Surplus
Topic
Impact of Input Costs on Supply
Difficulty
hard level question
Cognitive Level
understand
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