📚 Learning Guide
Supply and Demand Interactions
easy

A leftward shift of the supply curve due to increased production costs will always lead to higher prices and a reduction in quantity sold, regardless of demand changes.

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Learning Path

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A

True

B

False

Understanding the Answer

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Answer

When the supply curve shifts to the left because production costs go up, it means that producers can make fewer goods at the same price. This increase in costs might come from things like higher wages or more expensive materials, making it harder for sellers to supply the same quantity of goods. As a result, to cover these costs, sellers often raise their prices. For example, if a bakery faces higher flour prices, it might sell fewer loaves of bread at a higher price. So, even if the demand for bread stays the same, the higher costs mean less bread is sold, and prices go up.

Detailed Explanation

This statement is true. Other options are incorrect because This answer suggests that higher prices and less quantity sold will always happen.

Key Concepts

Supply and Demand Interactions
Market Equilibrium
Price Elasticity
Topic

Supply and Demand Interactions

Difficulty

easy level question

Cognitive Level

understand

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