how would supply shift caused by lower costs of production affect price and quantity
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she isn't, shes just trying to help. this website is for helping students not giving them the answer.
what is the answer !
When the cost of production decreases, it typically leads to a shift in the supply curve. This shift can influence both the price and quantity of a product. Let's break it down into simple steps to understand how this works:
1. Identify the initial supply curve: Start by understanding the position of the original supply curve. This curve represents the relationship between the price of a product and the quantity suppliers are willing to produce at different price levels.
2. Determine the cost of production decrease: If the cost of production decreases, suppliers can now produce goods at a lower cost. This might occur due to advancements in technology, lower input prices, or improved production processes.
3. Expect a rightward shift in supply: A decrease in production costs will cause the supply curve to shift to the right. This indicates that at every price level, suppliers are willing to produce and offer a higher quantity of goods to the market.
4. Analyze the effect on price: With a shift to the right in the supply curve, the new equilibrium is likely to have a lower price. This is because suppliers can now afford to offer the product at a lower cost, which increases competition among suppliers and drives down the price.
5. Assess the effect on quantity: The increase in supply results in a higher quantity of the product available in the market. As suppliers can now produce more at a lower cost, they are motivated to produce and sell more goods, leading to an increase in the quantity supplied.
In summary, a supply shift caused by lower costs of production leads to a decrease in price and an increase in quantity. Lower production costs enable suppliers to offer goods at a reduced price, which in turn encourages them to produce and supply a higher quantity to the market.