Sia
Question
Microeconomics
Posted 7 months ago
Which of the following statements correctly describes how an event will impact supply or quantity supplied?
Choose 1 answer:
(A) A decrease in resource costs causes an increase in the supply curve
(B) An increase in demand causes an increase in supply.
(C) A price increase causes an increase in supply.
(D) An increase in costs of production causes the supply curve to increase.
(E) A price decrease increases quantity supplied.
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Answer from Sia
Posted 7 months ago
Solution
a
Decrease in Resource Costs: A decrease in resource costs causes an increase in the supply curve. This is because lower resource costs make production cheaper, allowing suppliers to produce more at each price level
b
Increase in Demand: An increase in demand does not cause an increase in supply. Instead, it causes a movement along the supply curve, leading to a higher equilibrium price and quantity
c
Price Increase: A price increase does not cause an increase in supply. It causes an increase in the quantity supplied, which is a movement along the supply curve, not a shift of the supply curve
d
Increase in Production Costs: An increase in production costs causes the supply curve to decrease (shift to the left), not increase. Higher production costs make it more expensive to produce goods, reducing the quantity supplied at each price level
e
Price Decrease: A price decrease increases the quantity supplied. This is a movement along the supply curve, not a shift of the supply curve
Answer
(A) A decrease in resource costs causes an increase in the supply curve
Key Concept
Supply Curve Shifts
Explanation
A decrease in resource costs reduces production expenses, allowing suppliers to produce more at each price level, thus shifting the supply curve to the right.
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