Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
The supply curve will shift to the left, indicating a decrease in supply
B
The supply curve will shift to the right, indicating an increase in supply
C
The supply curve will remain unchanged
D
The supply curve will become steeper, indicating higher prices for the same quantity
Understanding the Answer
Let's break down why this is correct
Answer
When the input costs for producing a good go up significantly, the supply curve for that good will likely shift to the left. This means that producers will supply less of the good at each price level because it becomes more expensive for them to make it. For example, if a bakery faces higher costs for flour and sugar, it may reduce the number of cakes it bakes, even if customers are willing to buy more. As a result, the overall quantity of cakes available in the market decreases. This leftward shift in the supply curve can lead to higher prices for consumers since there are fewer goods available.
Detailed Explanation
When it costs more to make something, producers will make less of it. Other options are incorrect because Some might think higher costs mean more supply; It's a common mistake to think costs don't affect supply.
Key Concepts
input costs
supply curve
Topic
Impact of Input Costs on Supply
Difficulty
medium level question
Cognitive Level
understand
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