Question

Good X is produced in a competitive market using input A. Explain what would happen to the supply of good X in each of the following situations:

a. The price of input A decreases. multiple choice 1 It will not change. It will decrease. It will increase.
b. An excise tax of $3 is imposed on good X. multiple choice 2 It will decrease. It will not change. It will increase.
c. An ad valorem tax of 7 percent is imposed on good X.
i. It will not change.
ii It will increase.
iii It will decrease.
d. A technological change reduces the cost of producing additional units of good X.
i. It will decrease.
ii It will not change.
ii It will increase.

Answer 1

It will increase.

It will decrease.

It will decrease.

It will increase

Step-by-step explanation:

If the price of input A needed to produce good X decreases, it would become cheaper to produce good X. Thus the production of good X would increase. The supply curve would shift rightward and the quantity supplied would increase

A tax is a compulsory sum levied on goods and services by the government. Taxes increases the price of product. Excise and ad valorem tax are types of taxes and they would increase the cost of producing good X. This would discourage production of good X. Supply would fall and the supply curve would shift leftward. Quantity supplied would fall

Technological change makes it cheaper to produce good X. Thus the production of good X would increase. The supply curve would shift rightward and the quantity supplied would increase