Which of the following factors can shift a supplier's focus from their current goods?

Prepare for the SACE Stage 2 Economics exam with a comprehensive quiz. Study through flashcards and multiple-choice questions, each featuring hints and explanations for thorough understanding. Get ready for your exam!

A supplier's focus can shift due to higher prices of alternative goods because this creates an incentive for them to reallocate their resources towards producing those alternative goods. When the price of a substitute product increases, it often represents a more lucrative opportunity for suppliers, prompting them to consider switching from their current goods to capitalize on the higher profit margins available from the alternatives. This is rooted in the principle of profit maximization; suppliers aim to optimize their production based on market conditions and potential revenues.

In contrast, increased consumer preference for existing products would reinforce the supplier's current focus rather than shift it. A reduction in the cost of production could empower suppliers to enhance their current offerings or lower prices, but wouldn’t necessarily cause a shift in focus. Additionally, improved technology in current goods may augment productivity and efficiency, leading to greater emphasis on those existing goods instead of alternatives. Therefore, the option regarding higher prices of alternative goods aligns with the motivation for suppliers to shift their focus based on potential profitability.

Subscribe

Get the latest from Examzify

You can unsubscribe at any time. Read our privacy policy