ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -From the firm’s perspective, taxes or regulations are an additional cost of production that shifts supply to the left, leading the firm to produce a lower quantity at every given price. Government subsidies, however, reduce the cost of production and increase supply at every given price, shifting supply to the right.

Detailed explanation-2: -An increase in factor prices should decrease the quantity suppliers will offer at any price, shifting the supply curve to the left. A reduction in factor prices increases the quantity suppliers will offer at any price, shifting the supply curve to the right.

Detailed explanation-3: -When there is an increase in unit tax on the production of goods by the government, the unit cost of production will rise and consequently, the firm would supply less than before at the given price. The supply would decrease implying that the supply curve would shift to the left.

Detailed explanation-4: -Conversely, if a firm faces higher costs of production, then it will earn lower profits at any given selling price for its products. As a result, a higher cost of production typically causes a firm to supply a smaller quantity at any given price. In this case, the supply curve shifts to the left.

Detailed explanation-5: -Answer and Explanation: False. Since steel is used in the production of automobiles, an increase in the price of steel means that producing automobiles will be expensive. Thus, less automobiles will be produced and the supply curve for automobiles will shift to the left.