The Diagram Below Represents the Producer Side of the Market

Question

Examlex · Accepted Answer

The Answer is (a) The diagram:

(a) The diagram: A drop in the price of skateboards, say from P<sub>A</sub> to P<sub>B</sub>, results in a movement downward along the supply curve, such as shown above from A to B, resulting in fewer skateboards offered for sale (Q<sub>A</sub> to Q<sub>B</sub>). Using economic terminology, this is referred to as a decrease in the quantity supplied. (b) The diagram: An increase in price of wheels used in making the skateboards means the cost of manufacturing skateboards increases. This results in a shift up (left) of the supply curve for skateboards, from S to S'. At the original price of P<sub>A</sub>, sellers were willing to supply the quantity at Point A on supply S but now are willing to sell the quantity at Point B on S'. Using economic terminology, this leftward shift of the supply curve is referred to as a decrease in supply.

A drop in the price of skateboards, say from P_A to P_B, results in a movement downward along the supply curve, such as shown above from A to B, resulting in fewer skateboards offered for sale (Q_A to Q_B). Using economic terminology, this is referred to as a decrease in the quantity supplied.
(b) The diagram:

An increase in price of wheels used in making the skateboards means the cost of manufacturing skateboards increases. This results in a shift up (left) of the supply curve for skateboards, from S to S'. At the original price of P_A, sellers were willing to supply the quantity at Point A on supply S but now are willing to sell the quantity at Point B on S'. Using economic terminology, this leftward shift of the supply curve is referred to as a decrease in supply.

The Diagram Below Represents the Producer Side of the Market

Definitions: