In the market for scooters, the price of one of the resources used to produce scooters has decreased.

Which of the following graphs show best represents how this market affected by a decrease in the cost of producing scooters?

Choose 1 answer:
(A)
(B)
(C)
(D)
(E)

Question

In the market for scooters, the price of one of the resources used to produce scooters has decreased.

Which of the following graphs show best represents how this market affected by a decrease in the cost of producing scooters?

Choose 1 answer:
(A)
(B)
(C)
(D)
(E)

Accepted Answer

∻Solution∻ ‖ a ⋮ Decrease in Production Cost: When the cost of producing scooters decreases, the supply curve shifts to the right. This is because producers are willing to supply more scooters at each price level due to the lower production costs. ‖ ‖ b ⋮ Graph Analysis: In the given graphs, we need to identify the one where the supply curve shifts to the right, indicating an increase in supply. ‖ ‖ c ⋮ Graph E: Graph E shows both the demand curve shifting to the right (D1 to D2) and the supply curve shifting to the right (S1 to S2). This represents an increase in both demand and supply. However, since the question specifically asks about the effect of a decrease in production cost, we focus on the supply shift. ‖ ‖ d ⋮ Correct Graph: Graph A shows the supply curve shifting to the right (S1 to S2) while the demand curve remains unchanged (D1). This best represents the market affected by a decrease in the cost of producing scooters. ‖ ∻Answer∻ ⚹ Graph A ⚹ ∻Key Concept∻ ⚹ Supply Curve Shift ⚹ ∻Explanation∻ ⚹ A decrease in the cost of production leads to an increase in supply, which is represented by a rightward shift of the supply curve. Graph A accurately depicts this scenario.◊What impact does a decrease in the cost of producing scooters have on the equilibrium price and quantity in the market, based on Microeconomics principles⍭ Generate me a similar question◊⚹

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