I feel like this is quite a stupid question, but I can't wrap my head around it. Why do suppliers make less of a good as profits drop? Intuitively, shouldn't they make more of the good in order to cope with the drop in profits? I understand that someone might say that the producers time is better used to work on supplying some other sort of good, but if an entire aggregate price level increases, what other options are there besides trying to make more of the item (as other industries have suffered the same drop in price level)?
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$\begingroup$ This is a good question which has been asked (but perhaps not well answered) before, see: economics.stackexchange.com/questions/24045/… $\endgroup$– user17900Oct 15, 2019 at 12:00
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