If the cost of raw materials used to make shoes rises sharply, what happens to the supply of shoes?

Question

BlackTom AI · Accepted Answer

Higher input costs for production (raw materials) act as a non-price determinant of supply and cause the supply curve to shift leftward — i.e., the market supplies fewer shoes at every given price.

1) Relevant concepts
- Supply curve: shows quantity producers are willing to sell at each price.  
- Determinants of supply: input costs, technology, taxes/subsidies, expectations, etc. A change in input cost changes supply (shifts the curve), not simply quantity supplied.  
- “Supply contracts” (or “supply decreases/leftward shift”) means producers supply less at each price.

2) Step-by-step reasoning
- Raw material costs rise → production becomes more expensive per shoe.  
- At the original market price, some firms find it less profitable to produce the same quantity, so they reduce output.  
- Across the industry, fewer shoes are offered at each price level → the supply curve shifts left (supply contracts).

3) Calculations
- No numerical calculation is required here; the conclusion follows from the qualitative effect of higher input costs on producers’ willingness to supply.

4) Why the correct answer is correct
- “Supply will contract” precisely describes the leftward shift in the supply curve caused by higher production costs. Producers reduce output at each price, so overall market supply falls.

5) Why the other options are incorrect
- a. “It will stay the same” is wrong because a key determinant (input cost) changed, so supply must change.  
- b. “It will increase” is opposite the effect; higher costs do not raise supply.  
- d. “It will decrease” is conceptually similar to (c), but the test’s intended phrasing is (c) “Supply will contract.” Option (d) is a less precise wording in this context.

6) Conclusion
The correct answer is: Supply will contract — this matches the provided answer.

If the cost of raw materials used to make shoes rises sharply, what happens to the supply of shoes?Single choice

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