Question

In: Economics

Which of the following would cause a definite leftward shift of the supply curve? an increase...

Which of the following would cause a definite leftward shift of the supply curve?

an increase in the cost of an input and an expectation by firms of a lower price

an increase in the price of a complement in production and a decrease in the cost of an input

an increase in taxes and an increase in the number of firms

an increase in the price of a substitute in production and a decrease in productivity

Solutions

Expert Solution

Option 4

an increase in the price of a substitute in production and a decrease in productivity

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an increase in the cost of input decreases supply and shifts the supply to the left and an expectation by firms of a lower price increases supply and shifts the supply to the right so it is not definite in total effect.

an increase in the price of a complement in production decreases demand and shifts left and a decrease in the cost of input increases supply and shifts right. It is the right to shift.

an increase in taxes decreases supply and shifts the supply to the left and an increase in the number of firms increases supply and shifts to the right.

an increase in the price of a substitute in production increases the demand for the input of the firm and it increases the price of the input which decreases supply and shifts the supply to the left and a decrease in productivity decreases supply and shifts the supply to the left so in total it shifts left.


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