The decrease in the price of a good that is used as an input for a second good would (for the second good)do what to the supply curve?
The correct answer and explanation is:
The correct answer is: The supply curve for the second good would shift to the right (increase in supply).
Explanation:
When the price of a good used as an input in producing another good decreases, the cost of production for the second good becomes lower. Inputs are the resources, materials, or components used to produce a final product. For example, if the price of steel (an input) decreases, then producing cars (the second good) becomes cheaper for manufacturers.
Because production costs are lower, producers are willing and able to supply more of the second good at every price level. This means the supply curve, which shows the relationship between the price of the good and the quantity supplied, will shift to the right. A rightward shift in the supply curve indicates an increase in supply.
This change does not mean the price of the second good changes immediately but that for any given price, producers supply a greater quantity. This happens because the lower input cost improves profitability or reduces losses, encouraging firms to increase production.
In summary, a decrease in the price of an input reduces the production costs for the second good, which increases supply and causes the supply curve of the second good to shift right. This results in a larger quantity being supplied at each possible price level.