When does a contraction in supply take place?

Multiple choice question for Supply and Demand. Select an option, then review the explanation below.

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When demand increases and moves outwardWhen the supply curve moves inwardWhen the quantity supplied decreases as price dropsWhen the supply curve moves outward

Explanation

A contraction in supply happens when the quantity supplied decreases due to a reduction in price, not because of a shift in the supply curve.

Practice related questions from the same subject.

1.What is the typical shape of a demand curve?
2.What term describes a company earning profits beyond its normal profit level?
3.How does an increase in marginal cost affect output, and how does an increase in marginal revenue impact output?
4.Marginal revenue refers to the ________ resulting from producing an additional ________ of output.
5.What are firms generally assumed to do with their costs and profits?

When does a contraction in supply take place?

Explanation

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