As the Price of Jeans Rises, Manufacturers That Make and Sell

question 133

Multiple Choice

As the price of jeans rises, manufacturers that make and sell jeans are likely to

• A) decrease production and thus decrease the supply.
• B) increase production and thus increase the supply.
• C) do nothing to influence the available supply of jeans.
• D) discontinue producing jeans in favour of a different product.
• E) increase production to influence the demand for jeans.

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Definitions:

Price Takers

Individuals or companies who accept the prevailing prices in the market of their products without having the ability to influence them.

Marginal Productivity Theory

An economic theory suggesting that payment to factors of production equals the value of their marginal contribution to the production process.

Equilibrium Value

The price at which the quantity of goods supplied is equal to the quantity of goods demanded in a market.

Factor Of Production

Inputs employed in the production of goods and services, typically classified as land, labor, capital, and occasionally entrepreneurship.