Question

Variables typically included in a multivariate supply function (other than the price and quantity of the item

the supply function represents) are prices of other goods that use similar input resources for production, expectations, the number of suppliers, techniques of production, taxes and subsidies, and prices of input resources, weather. Please answer the following questions about the affect changes in other variables might have on the supply of the item. These changes will either cause supply to increase (shift right) or decrease (shift left). Use either word as applicable, for the short answer.

A.Suppose the market price of fuel oil increases (preparing for the winter demand), what will refiners do to the supply of gasoline (which uses the same input resources as fuel oil)?
B.A tariff is a form of trade restriction (that behaves much like a tax). Suppose the United States imposes a high tariff on imported broccoli. How might this change the supply of imported broccoli?
C.How will a decrease in the productivity of technology affect the supply of the item being considered, assuming no increase in the availability of manufacturing materials?
D.If the price of an input resource increases (and there are no cheaper substitutes for the resource) then producers of the item the resource is used to produce are likely to ____________________ the amount of the item produced
E.A subsidy is paid to vaccine producers in order to _______________ the supply of vaccine.

Answer 1

When the market price of fuel oil increases, refiners will likely decrease the supply of gasoline. A high tariff on imported broccoli will likely decrease the supply of imported broccoli. A decrease in the productivity of technology will decrease the supply of the item being considered.

Step-by-step explanation:

A. When the market price of fuel oil increases, refiners will likely decrease the supply of gasoline that uses the same input resources as fuel oil. This is because the cost of production for gasoline will increase, making it less profitable for refiners to produce and supply.

B. If the United States imposes a high tariff on imported broccoli, the supply of imported broccoli will likely decrease. This is because the high tariff will increase the cost of importing broccoli, making it less profitable for suppliers to supply.

C. A decrease in the productivity of technology will decrease the supply of the item being considered, assuming no increase in the availability of manufacturing materials. This is because a decrease in technology productivity will increase the cost of production, making it less profitable for producers to supply.

D. If the price of an input resource increases and there are no cheaper substitutes for the resource, producers of the item the resource is used to produce are likely to decrease the amount of the item produced. This is because the increase in the price of the input resource will increase the cost of production, making it less profitable for producers to produce and supply.

E. A subsidy is paid to vaccine producers in order to increase the supply of vaccine. This is because the subsidy reduces the cost of production for vaccine producers, making it more profitable for them to produce and supply.