Future Business Leader Achievments (FBLA) Economics Practice Exam

Which of the following are NOT a determinant of the supply of peanut butter?

1. Price of peanuts

2. Wages of peanut butter packers

3. Price of peanut butter substitutes

4. Existing peanut butter-making technology

The correct answer is: Price of peanut butter substitutes

The correct answer identifies that the price of peanut butter substitutes is not a determinant of the supply of peanut butter. In economics, supply determinants refer specifically to factors that directly influence a producer's ability and willingness to supply a product, in this case, peanut butter. The price of peanuts is crucial because peanuts are a primary input in the production of peanut butter. If the price of peanuts increases, it would likely lead to a decrease in supply since it becomes more expensive to produce peanut butter. Wages of peanut butter packers also have a direct impact on supply. Higher wages could lead to increased production costs, possibly resulting in a decrease in the supply of peanut butter if producers cannot maintain profitability. Existing technology used in the production of peanut butter can affect supply as well. Advances in technology can increase efficiency, thereby increasing the supply of peanut butter. Conversely, outdated technology may hinder production and reduce supply. The price of substitutes, however, primarily influences demand rather than supply. When the price of peanut butter substitutes increases, consumers may shift their preferences towards peanut butter, thereby increasing its demand without affecting the supply. Thus, it does not qualify as a determinant of the supply of peanut butter itself.