Question

Which of the following will cause a rightward shift (increase) of the supply curve for OLED smart TVs?

Answers:

A. A decrease in the labor costs associated with the production of OLED smart TVs

B. An improvement in the technology used to produce OLED smart TVs

C. A decrease in the price of regular smart TVs

D. All of the above

Answer 1

As labor cost decreases this means that marginal cost(MC) of producing OLED TVs also decreases. Thus according to profit maximizing condition MR(Marginal Revenue) = MC, we have higher profit maximizing quantity because MC decreases and shift downward now MR = MC at higher level of quantity. Thus higher quantity will be supplied at any price level and thus Supply will increase and shift to the right.

Similarly is with advancement in technology. As technology advances Productivity of inputs increases and thus marginal cost of producing goods decreases. Thus according to profit maximizing condition MR(Marginal Revenue) = MC, we have higher profit maximizing quantity because MC decreases and shift downward now MR = MC at higher level of quantity. Thus higher quantity will be supplied at any price level and thus Supply will increase and shift to the right.

When price of Regular Smart TVs decreases, producers will find selling OLED TVs relatively more profitable than before and thus they will supply more OLED Tvs at any price level and thus Supply of OLED TVs will increase and shift to the right.

Hence, the correct answer is (D) All of the above.