Question

When drawing demand and supply curves, economists are assuming that the primary influence on production and purchasing decisions is:

A) price
B) the cost of production
C) the overall state of the economy
D) consumer incomes

Answer 1

Economists assume that the primary influence on production and purchasing decisions when drawing demand and supply curves is A) price.

Step-by-step explanation:

Economists assume that the primary influence on production and purchasing decisions when drawing demand and supply curves is price. This means that changes in price will affect the quantity demanded and supplied. When the price of a good or service increases, consumers will generally demand less of it, while producers will be willing to supply more in order to maximize profits.

For example, if the price of a pair of shoes increases, consumers may choose to buy fewer pairs, while shoemakers may increase production to take advantage of the higher price.