Figure 4-6Refer to Figure 4-6.The shift from S to S' could be caused by an

Question

Figure 4-6​Refer to Figure 4-6.The shift from S to S' could be caused by an

BlackTom AI · Accepted Answer

In examining Figure 4-6, we’re looking for what could cause the supply curve to shift from S to S'.
Option a: an increase in the price of the good. This would cause a movement along the same supply curve (upward along S or a movement to a different quantity supplied on S), not a shift of the entire curve. So, it does not explain a shift from S to S'.
Option b: improvement in production technology. This makes production more efficient, reducing costs and enabling more output at each price. As a result, the entire supply curve shifts to the right from S to S', which aligns with the typical interpretation of a supply shift due to technological progress. This is a plausible cause for the shift.
Option c: increase in income. An increase in consumers' income typically affects demand, not supply. Higher income shifts the demand curve (D) to the right, not the supply curve. Therefore, it would not cause S to shift to S'.
Option d: increase in input prices. Higher input costs raise production costs, reducing supply and shifting the supply curve to the left, i.e., away from S toward a new curve left of S. This would be a shift in the opposite direction of S to S', so it does not explain the observed shift to S'.
Overall, among the options, only an improvement in production technology (Option b) logically explains a rightward shift of the supply curve from S to S' in the diagram.

Figure 4-6Refer to Figure 4-6.The shift from S to S' could be caused by anSingle choice

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Figure 4-6Refer to Figure 4-6.The shift from S to S' could be caused by anSingle choice