How would supply shift caused by lower costs of production affect price and quantity? (1 point) Responses higher price, lower quantity higher price, lower quantity lower price, lower quantity lower price, lower quantity lower price, higher quantity lower price, higher quantity higher price, higher quantity
lower price, higher quantity
When there is a supply shift caused by lower costs of production, it will affect both the price and quantity of a good or service. The correct response is:
- Lower price, higher quantity.
When the costs of production decrease, sellers are able to produce goods or services at a lower cost. As a result, they are willing and able to supply more of that good or service at each price level. This leads to a rightward shift of the supply curve.
With the increase in supply, the equilibrium price of the good or service will decrease, as there is now an abundance of the product available in the market. Additionally, the equilibrium quantity will increase as sellers are willing and able to supply a larger quantity at the lower price.
When the supply shifts due to lower costs of production, it leads to a change in both price and quantity in the market. To understand the specific impact, we need to consider the law of supply, which states that as the price of a product increases, the quantity supplied also increases, and vice versa.
In this case, the lower costs of production mean that producers are able to produce goods at a lower cost, resulting in a shift in the supply curve to the right. This means that at any given price level, suppliers are now willing to supply a larger quantity of goods.
With a lower cost of production, suppliers can still maintain profitability while offering a lower price for their goods. Consequently, we can expect the price to decrease. This captures the inverse relationship between price and quantity supplied.
In terms of quantity, the shift in supply to the right signifies an increase in the quantity of goods supplied at each price level. Therefore, the quantity supplied would also increase.
To summarize, a supply shift caused by lower costs of production would result in a lower price and a higher quantity supplied in the market. Therefore, the correct response would be "lower price, higher quantity."