1)Which following change in the coffee market would shift the supply curve to the right? A

1)

• The correct answer is B. The wage for employees in the coffee business decreases.

In a ceteris paribus assumption, the shift of the supply curve to the right means lowering the prices and increasing the quantity supplied. The lowering of prices will have a direct effect on the labor side as it also lowers the wages of the employees. The lowering of wages reduces the production cost, which means higher profitability on the part of the producers. Hence, they supply more coffee. Accordingly, if we supply more of a particular product, the supply curve will shift to the right.

2)

The correct option is C. An increase in the price of car washing equipment.

When the supply curve for a given good or service shifts to the left, it means that there is less quantity supplied at each level of price. There are various factors that may decrease the supply for a specific product, for example, an increase in taxes or an increase in the prices of resources used in production. Considering a car wash service, the determinant that would decrease the supply of this service is definitely the increase in the price of the equipment used for washing cars. As this price rises, the cost of providing the service increases making the firms less willing to provide the service.