Question

In fig 3-7, what are the effects of a price decrease from \(5 per portable power bank to \)3 per portable power bank on the quantities supplied by supplier 1 and by supplier 2 individually and combined?

Short answer

Reduces from 1: 55 to 35 and 2: 35 to 20

Combined: 90 to 55

Step-by-step solution

Step1. Introduction

Supply schedule or the supply function is the representation of individual as well as combined supply of portable power bank.

Law of supply establishes a direct relationship between prices and the quantity supplied.

Step2. Explanation

As price falls to $3 from $5, suppliers will supply lower quantity of goods. Supplier one shall supply 35 instead of 55 power banks and Supplier two shall supply 20 instead of 35 power banks.

The combined supply at $3 is 55 units instead of 90 units earlier at $5.