📚 Learning Guide
Impact of Input Costs on Supply
easy

How does an increase in input costs typically affect the supply curve of a product?

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Learning Path
Learning Path

Question & Answer
1
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2
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3
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Choose the Best Answer

A

The supply curve shifts to the right

B

The supply curve shifts to the left

C

The supply curve remains unchanged

D

The supply curve becomes vertical

Understanding the Answer

Let's break down why this is correct

Answer

When the costs of inputs, like materials or labor, increase, it becomes more expensive for producers to make their products. This usually leads to a decrease in supply because companies may not be able to afford to produce as much as they did before. As a result, the supply curve shifts to the left, meaning that at the same price, less of the product will be available in the market. For example, if a bakery faces higher prices for flour and sugar, it might bake fewer cakes, leading to fewer cakes being offered for sale. Thus, higher input costs can make it harder for businesses to supply products, affecting overall availability.

Detailed Explanation

When input costs go up, it costs more to make the product. Other options are incorrect because Some might think higher costs mean more supply, but that's not true; It's a common mistake to think supply stays the same.

Key Concepts

supply curve
Topic

Impact of Input Costs on Supply

Difficulty

easy level question

Cognitive Level

understand

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