Bicycles are made out of steel. If the price of steel increases, there is a shift in the supply curve of bicycles that leads to

Question

Quizplus · Accepted Answer

If the price of steel increases, it becomes more expensive for bicycle manufacturers to produce bicycles. As a result, the supply curve of bicycles shifts to the left, leading to a decrease in the quantity of bicycles supplied at each price. This decrease in supply will cause an increase in the equilibrium price of bicycles. Therefore, the correct answer is an increase in the price of a bicycle (Option C). A temporary or permanent surplus of bicycles is unlikely to occur if there is a shift in the supply curve unless there is a simultaneous decrease in demand. There is no reason to suggest a shift in the demand curve for bicycles due to the increase in steel prices.

Bicycles Are Made Out of Steel