This Test 30 pts This Questioni 2 pts The graph shows the su

This Test: 30 pts This Questioni 2 pts The graph shows the supply curve of lamps Now the number of suppliers oflamps decreases and all other influences on selling plans remain the same. Draw a curve that shows what happens to the supply oflamps today. Labelit. Check that your new supply curve obeys the law of supply. 0 of 1 01122111 Price (dollars per lamp) Quantity (millions of lamps per year) Draw only the objects specified in the question.

Solution

Supply curve is a diagram which shows the relation between price of commodity and quantity supplied. These two are directly related. Increase in price will mean higher revenue. So profit will increase. It will induce suppliers to supplier more units. thus price and quantity supplied are positively related. So supply curve has a positive slope.

If yu reduce the quatity of supply then a crisis or shortage will take place in the market. as a result price will rise. This chage will shift the supply curve to the left.

In the diagram note that initial supply curve of lamp is S1. Due to decrease in quantity, supply curve has shifted to the left at S2. So less units are available ow at same price. If you compare S1 ad S2 curve then you will observe that at price $60 previously 3 units were available. Now after price shift only 2.5 uits ca be purchased. Thus lesser units are available after decrease in the quatity of lamp.