Other things remaining constant the market supply for a good increases if 1 its price increases 2 pr...........

Indian Economy (CDS) Inflation

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Other things remaining constant, the market supply for a good increases if :

1. its price increases.

2. price of its factors of production decreases.

price of other goods decreases.

Select the correct answer using the code given below:

This questions was previously asked in

2023 CDS -2 GK

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1 and 2 only

1 and 3 only

2 and 3 only

1, 2 and 3

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Explanation:

- An increase in the price of a good often leads to an increase in quantity supplied, but not a shift in market supply. Thus, statement 1 does not cause an increase in market supply.

- A decrease in the price of its factors of production lowers production costs, making it more attractive for suppliers. This leads to an increase in market supply. Thus, statement 2 is correct.

- When the price of other goods decreases, resources may shift to the production of the good in question, possibly increasing market supply for it. Thus, statement 3 is correct.

Correct Answer: 3. 2 and 3 only