Question

What will happen to the supply of a commodity, when (i) The price of raw material used in production of the commodity increases. (ii) A new firm supplying the commodity comes into existence. (iii) There is a technological progress.

Answer 1

Explanation:

supply increases, the supply curve shifts to the right, while a decrease in supply shifts the supply curve left. For example, if a new technology reduces the cost of gaming console production for manufacturers, according to the law of supply, the output of consoles will increase.

Answer 2

As a general rule, a commodity's price is directly linked to its supply. It implies that the delivered amount of the specified commodity also rises as price increases and ‘vice versa’.

Answer – Option (i)

Explanation:

• It occurs because there are greater chances of profit at higher rates.
• A product's price and supply are immediately associated, i.e. rises in “price supply and vice versa”.
• More commodity is delivered at a greater cost because there are greater chances of profit at greater rates that induce the company to give more to the selling industry.