Multiple Choice
Which of the following best describes a supply curve?
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3. The Market Forces of Supply and Demand
The Supply Curve
Multiple Choice
Which of the following events would cause the supply curve to shift to the right?
A
An increase in the price of the good
B
A decrease in the cost of production inputs
C
A decrease in the number of sellers in the market
D
The imposition of a new tax on producers
Verified step by step guidance1
Understand that a supply curve shows the relationship between the price of a good and the quantity supplied, holding other factors constant.
Recall that a shift to the right in the supply curve means an increase in supply at every price level, not just a movement along the curve.
Identify factors that cause the supply curve to shift, such as changes in production costs, technology, number of sellers, and taxes.
Analyze each option: an increase in the price of the good causes movement along the supply curve, not a shift; a decrease in production input costs lowers costs, encouraging more supply and shifting the curve right; a decrease in sellers reduces supply, shifting the curve left; a new tax increases costs, shifting the curve left.
Conclude that the event causing the supply curve to shift right is a decrease in the cost of production inputs because it makes production cheaper and increases supply.
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