In which statement (s) is "supply" used correctly?

(I) "An increase in the price of eggs will increase the supply of eggs."

(II) "As the cost of producing eggs rises, the supply of eggs will tend to fall."

a. in both statements I and II

b. in statement II only

c. in statement I only

d. in neither statements I nor II

Question

Business

Delaney

20 December, 02:23

In which statement (s) is "supply" used correctly?

(I) "An increase in the price of eggs will increase the supply of eggs."

(II) "As the cost of producing eggs rises, the supply of eggs will tend to fall."

a. in both statements I and II

b. in statement II only

c. in statement I only

d. in neither statements I nor II

+5

Answers (1)

Know the Answer?

Gilbert Gordon · Answer 1

Option (b) is correct.

Explanation:

(i) Law of supply states that if there is an increase in the price of the commodity then as a result the quantity supplied for that commodity also increases and if there is a decrease in the price of the commodity then as a result the quantity supplied for that commodity also decreases.

So, there is a relationship between price and quantity supplied not supply.

(ii) If there is an increase in the cost of production of eggs then as a result the producers of egg will reduce the production of eggs. Hence, this will lead to reduce the supply of eggs in the market.

Therefore, the second statement is correct.