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Which one of the following would cause a rightward shift of the supply curve? (a) A new tax is imposed on production of goods

Economics Dec 08, 2020

Which one of the following would cause a rightward shift of the supply curve?

(a) A new tax is imposed on production of goods.

(b) Some firms that have been producing goods go out of business.

(c) Firms producing goods find ways of lowering their production costs.

(d) There is an increase in demand for the good.

Expert Solution

The correct answer is (c) Firms producing goods find ways of lowering their production costs.

Some of the factors that would cause a shift in the supply curve are a change in the number of suppliers, expectations, weather, input prices, and technology. Technology can help to boost the efficiency of production. An increase in efficiency is related to a cost reduction. Therefore, firms could be able to produce more at the same cost. This leads to shift the supply curve to the right. In contrast, a tax imposition is related to a leftward supply curve shift. Fewer firms in the market also shift the supply curve to the left. An increase in demand will only cause increased prices.

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