Question:
Which of the following would shift the supply curve of a good to the left?
(1) An increase in the cost of production
(2) A decrease in the cost of production
(3) An increase in the price of a good
(4) A decrease in the price of a good
(5) A decrease in demand
Correct Answer:
(1)
Answer Explanation:
A leftward shift of the supply curve indicates a decrease in market supply. This happens when non-price determinants change unfavorably for producers. An “increase in the cost of production” (like higher wages or expensive raw materials) makes producing the good less profitable, forcing firms to supply less at every price level.
Topic: Supply Theory Year: 2019
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