📚 Learning Guide
Shifts in Supply Curve
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If the supply curve for electric cars shifts to the right, what is the most likely underlying cause for this change?

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Choose the Best Answer

A

A decrease in production costs due to advancements in battery technology

B

An increase in consumer demand for electric cars

C

Stricter government regulations on carbon emissions

D

A rise in the price of gasoline

Understanding the Answer

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Answer

A rightward shift of the electric‑car supply curve usually means that producing each car has become cheaper or easier, so manufacturers can supply more at every price. This often happens when battery prices drop, new production techniques lower costs, or governments give subsidies or tax breaks to car makers. When costs fall, firms can produce more cars for the same price, so the supply curve moves to the right. For example, if a new battery chemistry reduces battery costs by 30 %, a company can now produce 1,000 more cars at the same price, shifting the supply curve rightward.

Detailed Explanation

When battery makers find cheaper ways to build batteries, the cost to make each car goes down. Other options are incorrect because Higher consumer demand pulls the demand curve, not the supply curve; Tighter carbon rules raise production costs.

Key Concepts

Supply Curve Shifts
Production Costs
Consumer Demand
Topic

Shifts in Supply Curve

Difficulty

medium level question

Cognitive Level

understand

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