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Shen is skilled at making both necklaces and earrings. Shen has no preference between making necklaces or earrings since he earns the same amount from the two activities. If the selling price of earrings decreases from $20 to $10, then Shen's opportunity cost of making necklaces____________ and making necklaces is now__________ profitable than making earrings.

Suppose that the necklaces market consists of several suppliers like Shen who are skilled at making both necklaces and earrings. Which of the following is likely to happen to the supply curve of necklaces when the price of a earrings decreases?

a. It shifts to the left
b. It shifts to the right
c. It does not change

Respuesta :

Answer:

decrease and more and shift to the right side

Explanation:

  • If the selling price of bracelets decreases and all suppliers of earring and bracelets are like Shen
  • Shen's opportunity cost of making necklaces decrease and making necklaces is now more profitable than making earrings
  • If all suppliers decide to make more earrings, then the total supply increases, which appears to shift to the right side of the supply curve (in the demand and supply graph) (the quantity supplied is greater for each price).

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