Question : What is the best possible explanation for a shift in the market supply curve for a product?
Option 1: Price increases in raw materials
Option 2: Introduction of a government tax on that product.
Option 3: Introduction of a new technique that makes the production of that commodity less expensive.
Option 4: A successful advertising campaign that promotes the product.
Correct Answer: Introduction of a new technique that makes the production of that commodity less expensive.
Solution :
A new technique that makes it cheaper to produce the goods best explains a shift to the right in the market supply curve. A shift to the right in the supply curve, such as from new manufacturing technology, results in a lower equilibrium price and a higher quantity.
Hence option c is the correct answer.
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