Question

S1 10-- 25 50 ssume the graph shown represents the market for plzzas sold In an hour. If the original equillbrium was D and S1, which of the following could be a reason Si shifted to S2? Multipie Choice The price of pizza sauce has Increased. The price of pizza went down O The price of labor for pizza shops went down. None of these things would cause such a shitt.

Answer 1

Since supply of pizza has shifted from S₁ to S_{2 ,} it means that the supply of pizzas has increased. The supply of pizza has increased and the reason why S₁ shifted to S₂ because the price of the labor for pizza shops went down. Since the price of labour went down the cost of production of pizza also decreased. Therefore, the producer can now make more profit by selling the pizza at the same price. Therefore the producer would supply more. Hence there would be an increase in supply and so the supply curve has shifted from S₁ to S₂. Therefore the correct option is the price of labour for pizza shops went down.