A decrease in the price of flour will shift the supply curve for donuts

Question

Quizplus · Accepted Answer

A decrease in the price of flour, which is an input in the production of donuts, will reduce the cost of production for firms that produce donuts. This will result in an increase in the quantity of donuts supplied at any given price, causing the supply curve to shift to the right. As a result, the equilibrium price of donuts will decrease, while the equilibrium quantity of donuts will increase.

A Decrease in the Price of Flour Will Shift the Supply