An increase in supply could be caused by a(n)
A) increase in price
B) government-imposed price ceiling
C) decrease in resource prices
D) decrease in consumer incomes
E) unfavorable shift in tastes and preferences

Question

Quizplus · Accepted Answer

A decrease in resource prices would lower the production costs for firms, making it more profitable to produce and sell goods at the same price or even lower, thereby increasing the quantity supplied. An increase in price (A) would result in a movement along the supply curve, but it would not shift the curve itself. A government-imposed price ceiling (B) would reduce the ability and incentive for producers to supply goods at a lower price, leading to a shortage. A decrease in consumer incomes (D) would reduce the demand for goods and services, potentially leading to a decrease in supply, as firms try to adjust to the lower demand. An unfavorable shift in tastes and preferences (E) would decrease the demand for goods, leading to a decrease in supply as firms reduce the production of goods that are not in demand.

An Increase in Supply Could Be Caused by A(n)