ECONOMICS
PRICE CEILINGS AND FLOORS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Supply curve shifts left
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Supply curve shifts right
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Movement Along the Demand Curve
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Demand curve shifts right
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Demand curve shifts left
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Detailed explanation-1: -An increase in the price of fertilizer increases the cost of production of corn; the supply curve shifts up, and the supply of corn decreases.
Detailed explanation-2: -A subsidy will shift the supply curve to the right and therefore lower the equilibrium price in a market. The aim of the subsidy is to encourage production of the good and it has the effect of shifting the supply curve to the right (shifting it vertically downwards by the amount of the subsidy).
Detailed explanation-3: -Answer and Explanation: In supply, wheat and corn are substitute products. So, when the price of wheat decreases, the producers of wheat will reduce the production of wheat and shift to producing corn, which will increase the supply of corn.
Detailed explanation-4: -An increase in the number of sellers supplying a good or service shifts the supply curve to the right; a reduction in the number of sellers shifts the supply curve to the left.