An adverse supply shock would
A)shift the production function up and decrease marginal products at every level of employment.
B)shift the production function down and decrease marginal products at every level of employment.
C)shift the production function down and increase marginal products at every level of employment.
D)shift the production function up and increase marginal products at every level of employment.

Question

Quizplus · Accepted Answer

An adverse supply shock would decrease the availability of inputs and increase the cost of production, leading to a shift in the production function down. This would result in decreased marginal products at every level of employment.

An Adverse Supply Shock Would