What does it mean to say the input process decreases raw materials? Why does that cause the supply curve to shift right? If the supply curve shifts to the right, what happens to the equilibrium quantity?

Economics Dec 08, 2020

Expert Solution

What it is said that the "input process decreases raw materials," it means that as more output is produced the amount of raw materials that are needed is decreased as the production becomes more efficient. Because it this, it becomes cheaper to produce each units, which leads to higher supply (curve shifts to the right). Whenever supply increases, the corresponding new equilibrium quantity is higher, but the price is lower.

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