Which of the following will shift the supply curve of good X rightward?
- A) a decrease in the wages of workers employed to produce good X
- B) an increase in the cost of capital used to produce good X
- C) an increase in the price of energy
- D) a decrease in the number of suppliers of good X
- E) the price of Y, a substitute in production for good X, rises
The correct answer and explanation is :
Correct Answer: A) a decrease in the wages of workers employed to produce good X
Explanation:
In economics, the supply curve shows the relationship between the price of a good and the quantity that producers are willing to supply. A rightward shift of the supply curve means that at every price level, more of the good is supplied—this indicates an increase in supply.
Let’s examine each choice to understand which one causes a rightward shift:
A) A decrease in the wages of workers employed to produce good X
This lowers production costs, making it cheaper to produce good X. As a result, producers are willing and able to supply more at every price level. This is a classic factor that increases supply, causing a rightward shift in the supply curve.
✅ Correct.
B) An increase in the cost of capital used to produce good X
Capital (machinery, equipment) is a factor of production. If the cost of capital increases, production becomes more expensive. This reduces the profitability of supplying good X and causes a leftward shift (decrease in supply).
❌ Incorrect.
C) An increase in the price of energy
Energy is also an input. Higher energy prices raise production costs, which discourages supply. This shifts the supply curve leftward, not rightward.
❌ Incorrect.
D) A decrease in the number of suppliers of good X
Fewer suppliers mean less overall market supply. This results in a leftward shift in the supply curve.
❌ Incorrect.
E) The price of Y, a substitute in production for good X, rises
If producers can switch between making X and Y, and the price of Y increases, producers may switch to Y because it’s more profitable. Thus, the supply of X decreases, shifting its supply curve leftward.
❌ Incorrect.
In summary, only option A results in lower production costs, which leads to an increase in supply and a rightward shift in the supply curve.