Question

Question 10 of 20 > Cadmium is a chemical element with many industrial uses, including batteries and paint pigments. Suppose that the market for cadmium is highly volatile and can experience many shifts in productivity. Using this information, please place each of the situations in the correct category, according to which situation causes that effect. Productivity increases Productivity decreases Answer Bank quantity demanded decreases price decreases more demands will be satisfied price increases fewer demands will be satisfied quantity demanded increases

Answer 1

Higher productivity leads to reduction in the per unit costs of Production of the good. This means that some of the cost savings can be transferred to customers by the way of lower prices. Thus, as productivity increases, prices fall. According to law of demand, as prices fall, more units of the good will be demanded. This means that quantity demanded of the good will rise.

As productivity rises, there is another effect. The effect is that the company/Producer can now produce more good with the same resources. Thus he can supply more. As there is more supply, more demand can be satisfied.

The opposite story will run in case of decline in productivity. Lower productivity means increased per unit costs and lower supply and higher prices. This would eventually lead to less demands being satisfied.

So, we can write the points as follows-

Productivity increases	Productivity decreases
Price decreases	Prices increase
Quantity demanded increases	Quantity demanded decrease
More demands will be satisfied	Fewer demands will be satisfied