Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
The supply curve shifts to the right, increasing supply.
B
The supply curve remains unchanged.
C
The supply curve shifts to the left, decreasing supply.
D
The supply curve becomes perfectly elastic.
Understanding the Answer
Let's break down why this is correct
Answer
When the cost of raw materials increases, it becomes more expensive for producers to create their goods. In a competitive market, this higher cost means that producers will supply less of the product at the same price, leading to a shift in the supply curve to the left. For example, if a bakery has to pay more for flour, it may decide to bake fewer loaves of bread because the profit margin has decreased. This reduction in supply can lead to higher prices for consumers if demand remains the same. Overall, increased costs for raw materials can limit production and change market dynamics.
Detailed Explanation
When raw materials cost more, it costs producers more to make their products. 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 costs don't change supply.
Key Concepts
supply curve
raw materials
technology in production
Topic
Impact of Input Costs on Supply
Difficulty
hard level question
Cognitive Level
understand
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