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From the following statements about a firm's supply curve, select the correct statements:

(A) Technological progress is expected to shift the supply curve of a firm to the right.

(B) An increase in input prices is expected to shift the supply curve of a firm to the left.

(C) A decrease in input prices is expected to shift the supply curve of a firm to the left.

(D) The imposition of a unit tax shifts the supply curve of a firm to the left.

Choose the correct answer from the options given below:

Solution

✅ Correct Option: 1

Option 1 -> Includes statements A, B, and D which correctly identify factors that shift supply: technological progress (right shift), increase in input prices (left shift), and unit tax (left shift).

Option 2 -> Incorrectly includes statement C. A decrease in input prices shifts supply RIGHT, not left, so this option is wrong.

Option 3 -> Incorrectly includes statement C which states decrease in input prices shifts supply left, which is incorrect.

Option 4 -> Excludes statement A (technological progress) which correctly shifts supply right, and incorrectly includes statement C.


Hence, Option 1: (A), (B) and (D) only -> Statement A is correct because technological progress reduces production costs and increases efficiency, shifting supply rightward. Statement B is correct as higher input prices increase production costs, reducing supply at each price (leftward shift). Statement D is correct since a unit tax raises the effective cost per unit, reducing supply (leftward shift). Statement C is INCORRECT because a decrease in input prices lowers costs and shifts supply to the RIGHT, not left. Therefore, only A, B, and D are correct statements. -> correct

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