Which of the following statements correctly describes how an event will impact supply or quantity supplied?

Choose 1 answer:
INCORRECT
An increase in costs of production causes the supply curve to increase.
When costs increase, the supply curve decreases, not increases.
B A price decrease increases quantity supplied.
(c) A price increase causes an increase in supply.
(D) An increase in demand causes an increase in supply.
(E) A decrease in resource costs causes an increase in the supply curve

Question

Which of the following statements correctly describes how an event will impact supply or quantity supplied?

Choose 1 answer:
INCORRECT
An increase in costs of production causes the supply curve to increase.
When costs increase, the supply curve decreases, not increases.
B A price decrease increases quantity supplied.
(c) A price increase causes an increase in supply.
(D) An increase in demand causes an increase in supply.
(E) A decrease in resource costs causes an increase in the supply curve

Accepted Answer

∻Solution∻ ‖ a ⋮ Incorrect Statement: The statement "An increase in costs of production causes the supply curve to increase" is incorrect. When production costs rise, the supply curve shifts to the left, indicating a decrease in supply. ‖ ‖ b ⋮ Quantity Supplied: A price decrease does not increase quantity supplied; it decreases it. According to the law of supply, as the price of a good falls, the quantity supplied decreases. ‖ ‖ c ⋮ Supply vs. Quantity Supplied: A price increase does not cause an increase in supply; it causes an increase in quantity supplied. Supply refers to the entire supply curve, while quantity supplied refers to a specific point on the supply curve. ‖ ‖ d ⋮ Demand and Supply: An increase in demand does not directly cause an increase in supply. It may lead to a higher equilibrium price and quantity, but it does not shift the supply curve itself. ‖ ‖ e ⋮ Resource Costs: A decrease in resource costs causes the supply curve to shift to the right, indicating an increase in supply. Lower resource costs make production cheaper, encouraging producers to supply more at each price level. ‖ ∻Answer∻ ⚹ (E) 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, leading to an increase in supply. This is represented by a rightward shift of the supply curve. ⚹◊How does an increase in demand impact the supply curve according to the OCR model?⍭ Generate me a similar question◊

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