An increase in the number of tomato producers will a. increase market supply because the price...

An increase in the number of tomato producers will

a. increase market supply because the price of tomatoes will rise

b. increase market demand but leave market supply unchanged

c. increase market supply because market demand will increase as more tomatoes are produced

d. increase market supply because the market supply is the sum of all the individual tomato producers supply curves

Solutions

Expert Solution

Since the law of supply stats that there is a direct relationship between price and quantity supplied and other factors which affect the supply remains same.

Market supply is defined as the sum of supply of goods and services by all firms.

Factors affecting the Market supply curve are

Number of firms

State of technology

change in the price of inputs

Taxation policy

Expected price in future.

Hence when there is an increase in the number of tomato producers will increase market supply because the market supply is the sum of all the individual tomato producers supply curves. This is because with the addition of one more producer of tomato, total supply of tomato will increase. Hence market supply will increase and market supply curve shifts rightward.

Hence option d is the correct answer.

Rahul Sunny answered 1 year ago

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