(Figure: Demand and Supply of Sugar) Use Figure: Demand and Supply of Sugar. When the supply curve shifts from S1 to S2, the new intersection of supply and demand indicates an equilibrium price of _____ and an equilibrium quantity of 4,000. This supply shift could have resulted from _____.

Question

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When the supply curve shifts from S1 to S2, the equilibrium price increases from $10 to $15, and the equilibrium quantity remains at 4,000. This indicates that there has been an improvement in sugar refining technology, which has lowered the cost of producing sugar and shifted the supply curve to the right from S1 to S2. Choice A is incorrect because an increase in wages would increase the cost of producing sugar and shift the supply curve to the left, resulting in a higher equilibrium price and lower equilibrium quantity. Choice C is incorrect because an increase in the number of buyers would affect the demand curve, not the supply curve. Choice D is incorrect because an increase in sugar prices would not cause the supply curve to shift, but would result in a movement along the supply curve to a higher equilibrium price and quantity.