Question

Which of the following shifts the supply curve rightward? 

Select one: 

a. A decrease in the price of a factor of production used to produce the good. 

b. An increase in the population. 

c. A positive change in preferences for the good. 

d. A decrease in the price of the good.

Answer 1

Answer) Rightward shift in supply curve implies that supplier is now supplying or willing to supply more quantity at a given price,this shift is a favorable situation for supplier as s/he is supplying more and earning more profits,this favorable shift occurs when cost of his/her production of given product decreases,that is now it costs him/her to produce goods at a lower cost,for example,let us say you own a burger shop and produces burgers,it costs you $10 to produce a burger and you sell at $15 making a profit of $5 on every burger,now let us assume that cost of producing burger decreases from $10 to $8,now at $15 selling price you will be willing to supply more quantity as you are earning $2 extra profits on each burger,so this rightward shift happens when cost of production of good being supplied by producer decreases,now in the given option a) a decrease in the price of a factor of production used to produce the good,when this happens cost of producing good decreases which increases profit margin for supplier leading to rightward shift as explained in above explanation,so option a) a decrease in the price of a factor of production used to produce the good shifts the supply curve rightward and is the correct option.

Answer is complete.Thank you!