Suppose there is a drop in the price of an important factor input.What will be the effect on the aggregate supply curve?
A)There will be movement to the left,along the AS curve.
B)The AS curve will shift to the left.
C)There will be movement to the right,along the AS curve.
D)The AS curve will shift to the right.
E)There will be no change in the AS curve.

Question

Quizplus · Accepted Answer

A drop in the price of an important factor input will lower production costs for firms, leading to an increase in aggregate supply. This will cause the AS curve to shift to the right.

Suppose There Is a Drop in the Price of an Important