An economy is employing 2 units of capital, 5 units of raw materials, and 8 units of labor to produce its total output of 640 units.Each unit of capital costs $10; each unit of raw materials, $4; and each unit of labor, $3.If the per-unit price of raw materials rises from $4 to $8 and all else remains constant, the aggregate
A)supply curve would shift to the left.
B)supply curve would shift to the right.
C)demand curve would shift to the left.
D)demand curve would shift to the right.

Question

Quizplus · Accepted Answer

The increase in the cost of raw materials would increase production costs, leading to a decrease in supply, thus shifting the supply curve to the left.

An Economy Is Employing 2 Units of Capital, 5 Units