Learning Path
Question & Answer
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It shifts the supply curve to the left, increasing prices and decreasing quantity supplied
It shifts the supply curve to the right, decreasing prices and increasing quantity supplied
It has no effect on the supply curve
It only affects demand and not supply
Understanding the Answer
Let's break down why this is correct
Stricter rules raise the cost of making goods. Other options are incorrect because Some think tighter rules cut costs, but they actually add costs; Regulation changes how much firms can produce, so it does affect supply.
Key Concepts
Shifts in Supply Curve
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Deep Dive: Shifts in Supply Curve
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Definition
Shifts in the supply curve occur when factors other than price influence the quantity of a product supplied at each price level. Changes in production costs, technology, government policies, and expectations can shift the supply curve either outward (increase in supply) or inward (decrease in supply).
Topic Definition
Shifts in the supply curve occur when factors other than price influence the quantity of a product supplied at each price level. Changes in production costs, technology, government policies, and expectations can shift the supply curve either outward (increase in supply) or inward (decrease in supply).
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