Question

The supply of ice cream in town has decreased. Which of the following circumstances most likely caused the reduction? a. A new vendor opened in a neighboring town. b. The costs of milk and sugar decreased. c. Several competitors shut down for the season. d. Winter began, and snow fell for two weeks.

Answer 1

C. Several competitors shut down for the season

Step-by-step explanation:

Market Supply : Quantity of goods producers are willing & able to sell .

Factors affecting Supply : Price of the goods , Cost of Inputs , Technology , Other goods' price , Government policy , No. of sellers) .

Price & supply have positive relationship , inputs cost & supply have negative relationship , substitue goods price & suppy have negative relationship , govt tax have -ve & taxes have +ve relationship with supply , No. of sellers have positive relationship

'B' is linked to factor 'Inputs Cost' , but decrease in inputs cost would increase rather than decreasing supply (∵ higher profit) . 'D' is not linked with any factor of supply , is rather a factor affecting demand . 'A' & 'C' are linked to factor 'No. of Sellers' , but higher the no of sellers - more is the supply , so 'A' is wrong (it will increase supply) and 'C' Competitors shutting down due to season will decrease Market (Town) Supply .