The supply of ice cream in town has decreased. Which of the following circumstances most likely caused the reduction? a. A new vendor opened in a neighboring town. b. The costs of milk and sugar decreased. c. Several competitors shut down for the season. d. Winter began, and snow fell for two weeks.

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Business

Zorro

20 April, 19:51

The supply of ice cream in town has decreased. Which of the following circumstances most likely caused the reduction? a. A new vendor opened in a neighboring town. b. The costs of milk and sugar decreased. c. Several competitors shut down for the season. d. Winter began, and snow fell for two weeks.

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Renee · Answer 1

C. Several competitors shut down for the season

Explanation:

Market Supply : Quantity of goods producers are willing & able to sell.

Factors affecting Supply : Price of the goods, Cost of Inputs, Technology, Other goods' price, Government policy, No. of sellers).

Price & supply have positive relationship, inputs cost & supply have negative relationship, substitue goods price & suppy have negative relationship, govt tax have - ve & taxes have + ve relationship with supply, No. of sellers have positive relationship

'B' is linked to factor 'Inputs Cost', but decrease in inputs cost would increase rather than decreasing supply (∵ higher profit). 'D' is not linked with any factor of supply, is rather a factor affecting demand. 'A' & 'C' are linked to factor 'No. of Sellers', but higher the no of sellers - more is the supply, so 'A' is wrong (it will increase supply) and 'C' Competitors shutting down due to season will decrease Market (Town) Supply.