Question

How is the quantity and price of goods and services in the marketplace affected by an increase in Canadian input costs?
Responses

A price increases while the quantity decreasesprice increases while the quantity decreases

B price increases while quantity increasesprice increases while quantity increases

C price decreases while the quantity decreasesprice decreases while the quantity decreases

D price decreases while the quantity increasesprice

Answer 1

An increase in input costs generally leads to higher production costs for businesses. When production costs increase, suppliers often pass these costs onto consumers in the form of higher prices. As a result, the quantity of goods and services supplied may decrease because higher prices can reduce demand from consumers.

Based on this reasoning, the correct response would be:

**A) price increases while the quantity decreases.**