Suppose that the average prices of refrigerators have fallen over the past few y

Question

Suppose that the average prices of refrigerators have fallen over the past few years, yet the refrigerator companies have offered more and more of them for sale. Does this mean that the supply curve for refrigerators is downward sloping? Explain Suppose that the average prices of refrigerators have fallen over the past few years, yet the refrigerator companies have offered more and more of them for sale. Does this mean that the supply curve for refrigerators is downward sloping? Explain Suppose that the average prices of refrigerators have fallen over the past few years, yet the refrigerator companies have offered more and more of them for sale. Does this mean that the supply curve for refrigerators is downward sloping? Explain

Explanation / Answer

Refrigerator companies are supplying more and more refrigerator despite having decrease in the price of refrigerator because refrigerator industry is a decreasing cost industry because its AVC has been reduced due to some other factor and hence is able to supply more even at lower price. Thereby rheir supply curve will be downward sloping indicatoin that it is a decreasing cost industry.

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