Question

The supply function for good X is given by Qxs = 1,000 + PX - 5PY - 2PW, where PX is the price of X, PY is the price of good Y, and PW is the price of input W. If the price of input W increases by $20, then the supply of good X:

will increase by 20 units.


will increase by 40 units.


will decrease by 20 units.


will decrease by 40 units.

Answer 1

will decrease by 40 units.

Step-by-step explanation:

In supply function for good X the Price of W is Doubled. So any changein the price will increase the PW by double amount. The two times of price of good Y is subtracting from the supply function and price of the W will ultimately decrease the quantity demanded by double effect of each one dollar increase in it. So the supply of good X will decrease by 40 units.