📚 Learning Guide
Supply and Demand Interactions
easy

If an increase in production costs leads to a decrease in supply, then a decrease in consumer demand leads to what change in the market? A:Increase in price; B:Increase in quantity supplied; C:Decrease in price; D:Decrease in quantity demanded

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Learning Path
Learning Path

Question & Answer
1
Understand Question
2
Review Options
3
Learn Explanation
4
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Choose the Best Answer

A

Increase in price

B

Increase in quantity supplied

C

Decrease in price

D

Decrease in quantity demanded

Understanding the Answer

Let's break down why this is correct

Answer

When production costs go up, it becomes more expensive for producers to make goods, which means they supply less of those goods. If at the same time, consumer demand decreases, it means fewer people want to buy those goods. This combination usually leads to a decrease in price because sellers will lower prices to attract more buyers and sell their excess products. For example, if a toy company produces fewer toys due to high costs and fewer kids want to buy them, the company may lower prices to encourage sales. Therefore, the correct answer is C: Decrease in price.

Detailed Explanation

When people want to buy less, sellers lower prices to attract buyers. Other options are incorrect because Some might think lower demand means higher prices; It's a common mistake to think more supply comes with less demand.

Key Concepts

Supply and Demand
Market Equilibrium
Price Elasticity
Topic

Supply and Demand Interactions

Difficulty

easy level question

Cognitive Level

understand

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