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 decreases while the quantity increases

Answer 1

An increase in input costs generally leads to an increase in the production costs for goods and services. This typically causes producers to raise their prices to maintain profit margins, which usually results in a decrease in the quantity of goods and services supplied in the marketplace, as higher prices can lead to lower demand from consumers.

Given this scenario, the correct response would be:

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