Which of the following could cause a decrease in supply in a market?

Question

BlackTom AI · Accepted Answer

We begin by restating the question to ensure clarity: Which of the following could cause a decrease in supply in a market?

Option a: An increase in the cost of wages paid to workers. Elevated wages raise production costs for firms. When costs rise, producers are less willing or able to supply the same quantity at each price, leading to a leftward shift in the supply curve and a decrease in quantity supplied at given prices. This is a standard supply-side factor that reduces supply.

Option b: Lower cost of raw materials. If input costs fall, production becomes cheaper, encouraging firms to increase output. This would shift the supply curve to the right, increasing supply rather than decreasing it, so this option would not cause a decrease in supply.

Option c: An improvement in technology. Technological improvements typically make production more efficient, lowering the cost per unit and enabling firms to produce more at each price. This tends to increase supply (a rightward shift) rather than decrease it.

Option d: An increase in the number of firms in the market. More firms entering a market generally expands total market supply because each firm contributes its own output. This increase in competition and capacity tends to raise overall supply, not lower it, so this option would not cause a decrease.

In summary, the only factor among the choices that would reduce supply is higher input costs—specifically, the increase in wages. The other options describe conditions that typically raise supply or shift it to the right rather than decrease it.

Which of the following could cause a decrease in supply in a market?

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