A Decrease in the Demand for Peanut Butter Could Be

question 128

Multiple Choice

A decrease in the demand for peanut butter could be caused by a(n)

• A)increase in the supply of peanut butter
• B)increase in the price of peanut butter
• C)doubling of the price of bread
• D)drought in Georgia that destroyed 30 percent of the peanut crop
• E)increase in consumer income

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Definitions:

Constant Returns To Scale

A situation in production where an increase in the input of resources leads to a proportionate increase in output, resulting in no change in average costs.

Production Function

The relationship between the quantity of inputs used to make a good and the quantity of output of that good.

Inputs

Resources such as labor, materials, and capital that are used in the production process to create goods or services.

Output

The total quantity of goods or services produced within a given period by a firm, industry, or country.