IGCSE Economics Paper-1: Specimen Questions with Answers 63 - 63 of 64

Question 63

Question

MCQ▾

An outward shift in the supply curve is caused by:

Choices

Choice (4)

a.

Rise in factors other than price

b.

A rise in the price of commodity

c.

Change in demand of the commodity.

d.

A fall in the price of commodity

Answer

a.

Explanation

Supply refers to the quantity of a good or service that a supplier supplies in the market. Various factors and circumstances affect a seller՚s willingness or ability to produce and sell a good. Some of the actors are:

  • An increase in price of a product will induce an increase in the quantity supplied and vice versa.
  • Prices of related goods refer to goods from which inputs are derived for the production of the primary good.
  • If there is a technological advancement in the production technique, the supply increases.
  • Sellers expectations of future market conditions can directly affect supply.
  • High price of inputs will shift the supply curve left, as sellers are less willing to sell goods at a low price.
  • Intervention (in the form of taxes, subsidies, working hours etc.) from government can affect a good՚s supply.

However, some factors other than price can cause a shift in the production level. For example, a technological improvement reduces cost of production, which will shift the supply curve outward.

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