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

An increase in the price of steel will increase the cost of producing bicycles, leading to a decrease in the supply of bicycles. This will shift the supply curve to the left, resulting in a higher equilibrium price and lower equilibrium quantity for bicycles. Therefore, the correct choice is B, an increase in the price of a bicycle.  A is incorrect because there is no direct relationship between the price of steel and the demand for bicycles. C and D are incorrect because a shift in the supply curve does not necessarily mean a temporary or permanent surplus of bicycles.

Bicycles Are Made Out of Steel