📚 Learning Guide
Shifts in Supply Curve
easy

A decrease in the cost of production for a good will always result in a leftward shift of the supply curve.

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Learning Path
Learning Path

Question & Answer
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Choose the Best Answer

A

True

B

False

Understanding the Answer

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Answer

A drop in production costs makes it cheaper to make each unit of the good, so producers can supply more at every price level. This increased ability to produce shifts the supply curve to the right, not left. The logic is that higher cost would restrict supply, causing a leftward shift, but a lower cost expands supply. For example, if a new machine reduces the cost of producing widgets, a farmer can produce more widgets at the same price, shifting supply to the right. Thus the statement is incorrect.

Detailed Explanation

When production costs fall, each factory can make more units for the same price. Other options are incorrect because The mistake is thinking lower costs shrink supply.

Key Concepts

Supply Curve Shifts
Production Costs
Market Equilibrium
Topic

Shifts in Supply Curve

Difficulty

easy level question

Cognitive Level

understand

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