ECONOMICS
SUPPLY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Which of the following might cause the supply curve for motorcycles to shift left?
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The price of a cars, a substitute good, goes down
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A new motorcycle producer enters the market
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There is advancement in the production technology
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The cost of steel, a necessary raw material, rises
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Explanation:
Detailed explanation-1: -Ans: Since steel parts are the inputs used in the production of motorcycles, therefore, with the rise in the price of inputs, the cost of production for the producer will also rise which will lead to decreasing profit margins for him. Thus, it will finally result in a decrease in supply.
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.
Detailed explanation-3: -A rise in the cost of inputs of production will shift the supply curve to the left as the higher input costs correspond to a lower profit maximising quantity.
There is 1 question to complete.