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Question

If the price of milk goes down, the supply curve for ice-cream _____


A

shifts to the right due to increased cost of production

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B

shifts to the right due to decreased cost of production

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C

shifts to the left due to increased cost of production

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D

shifts to the left due to decreased cost of production

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Solution

The correct option is C

shifts to the right due to decreased cost of production


Milk is used in the production of ice-cream. If the price of milk goes down, the supply curve for ice-cream shifts to the right due to decreased cost of production. This is because more quantity can supplied owing to a greater profit margin.


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