Question

Which of the following could explain the shift from S1 to S2?

The supplier began to produce a more profitable good instead.
Innovative technology has caused resource costs to decrease.
The cost of a necessary resource in producing the good increased.
Two suppliers, that were major competitors, went out of business.

Answer 1

The shift of supply from S1 to S2 is because : ( C ) The cost of a necessary resource in producing the good increased

Factors leading to shift in supply

The decrease in supply from ( S1 to S2 ) is caused by an increase in cost of production without an increase in demand and price. As the cost of production increases  without a corresponding increase in demand and price of goods in the market the producers will tend to produce lesser amount of goods.

Hence we can conclude that The shift of supply from S1 to S2 is because The cost of a necessary resource in producing the good increased

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