Sia
Question
Statistics
Posted 10 months ago
Which of the following statements accurately describes how an event will impact supply?
Choose 1 answer:
(A) An increase in costs of production will cause an increase in the supply curve
(B) An increase in demand will cause an increase in supply
(C) An increase in price will cause supply to increase
(D) A decrease in price will cause supply to increase
(E) A decrease in resource costs will cause an increase in the supply curve
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Answer from Sia
Posted 10 months ago
Solution by Steps
step 1
To determine the impact of an event on the supply curve, we need to understand the law of supply and the factors that shift the supply curve
step 2
The law of supply states that, all else equal, an increase in the price of a good will lead to an increase in the quantity supplied
step 3
Factors that can shift the supply curve include changes in production costs, technology, expectations, number of sellers, and resource costs
step 4
An increase in costs of production (A) would decrease supply, not increase it, because it becomes more expensive to produce goods
step 5
An increase in demand (B) does not directly cause an increase in supply; it can lead to an increase in price, which could then lead to an increase in quantity supplied, but not the supply curve itself
step 6
An increase in price (C) leads to an increase in quantity supplied, not the supply curve itself. The supply curve represents the relationship between price and quantity supplied at all possible prices, not the quantity supplied at a specific price
step 7
A decrease in price (D) would typically lead to a decrease in quantity supplied, not an increase
step 8
A decrease in resource costs (E) would make production less expensive, which would allow producers to supply more at the same price, thus shifting the supply curve to the right, or increasing supply
Answer
E
Key Concept
Shifts in the supply curve
Explanation
A decrease in resource costs reduces production costs, which increases supply by shifting the supply curve to the right
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