-Refer to Exhibit 3-7.If S₁ is the relevant supply curve,a decrease in the price of a resource that is necessary for the production of good X causes A) the supply of good X to shift from S₁ to S₂ B) the supply of good X to shift from S₁ to S₃. C) a movement along S₁ perhaps from point A to point B. D) a movement along S₁ perhaps from point A to point C. E) no change in the supply of good X.

Question

Quizplus · Accepted Answer

A decrease in the price of a resource necessary for the production of good X would reduce production costs, leading to an increase in the supply of good X. This is represented by a shift of the supply curve to the right, from S₁ to S₂.