Consider the market in which bag producers operate Suppose that the price ot a b

Question

Consider the market in which bag producers operate Suppose that the price ot a backpack rises Explain how this event will change the quantity of backpacks supplied and the supply of backpacks today O A. The quantity of backpacks supplied increases and the supply of backpacks is unchanged O B. The quantity of backpacks supplied decreases and the supply of backpacks also decreases O C. The qarery ot backpacks suppled rareases and the supply of backpacks also increases O D. The supply of backpacks is unchanged and the quantity of backpacks supplied decreases O E. The supply of backpacks increases and the quantity of backpacks supplied is unchanged Click to select your answer 5 6

Explanation / Answer

With an increase in price of backpack, a signal of higher profit opportunities is provided to the producers. This results in higher quantity of backpacks supplied. Thus a rise in price of backpacks result in the increase in quantity of backpacks supplied and the supply of backpacks remains unchanged. In diagram this means that a rise in price results in a movement along the supply curve without any change in the curve itself.

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