Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
True
B
False
Understanding the Answer
Let's break down why this is correct
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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