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Supply and Demand

There is no such a thing as a product B - so substitute your own "real product" for Product B - for example, Product B could be "bananas" and consider what would happen if bananas became more fashionable, the price of a substitute for eating bananas decreases (for example, oranges), etc.

What effect will each of the following have on the supply of product B?
a. A technological advance in the methods of producing B.
b. A decline in the number of firms in industry B.
c. An increase in the price of resources required in the production of B.
d. The expectation that the equilibrium price of B will be lower in the future than it is currently.
e. A decline in the price of product A, a good whose production requires substantially the same techniques as does the production of B.
f. The levying of a specific sales tax upon B.
g. The granting of a 50-cent per unit subsidy for each unit of B produced.

Solution Preview

a) Supply increases
b) Supply decreases
c) Supply decreases
d) ...

Solution Summary

The solution discusses the effect of various market natures on the supply of a product.