A rise in production costs will cause the supply curve to shift to the left, which means:

Unlock all questions

This demo includes only 20 questions. Upgrade to access hundreds of questions, flashcards, exam simulations, and disable ads.

Full question bankExam simulationsFlashcards
From $25.99Unlock all

Prepare for the CIMA Fundamentals of Business Economics (BA1) Exam with question banks and study guides. Hone your skills with multiple choice questions and detailed explanations. Start your journey to success today!

Multiple Choice

A rise in production costs will cause the supply curve to shift to the left, which means:

Explanation:
Rising production costs raise the cost per unit, making production less profitable at any given price. The supply curve shows how much producers are willing to supply at each price, so higher costs shift the curve left, meaning a smaller quantity is supplied at every price. Therefore, the direct implication is that less is supplied at the same price. The leftward shift could push prices up if demand stays the same, but the key idea is the reduced quantity supplied at the same price. The other ideas either describe more being supplied at the same price (a rightward shift) or confuse supply with demand.

Rising production costs raise the cost per unit, making production less profitable at any given price. The supply curve shows how much producers are willing to supply at each price, so higher costs shift the curve left, meaning a smaller quantity is supplied at every price. Therefore, the direct implication is that less is supplied at the same price. The leftward shift could push prices up if demand stays the same, but the key idea is the reduced quantity supplied at the same price. The other ideas either describe more being supplied at the same price (a rightward shift) or confuse supply with demand.

More Multiple Choice Questions
Subscribe

Get the latest from Passetra

You can unsubscribe at any time. Read our privacy policy