How would supply shift caused by lower costs of production affect price and quantity?
A supply shift caused by lower costs of production would lead to an increase in the quantity supplied at every given price level. This is because producers are now able to produce goods and services at a lower cost, allowing them to supply more of the product at each price.
As a result of the increase in the quantity supplied, the supply curve would shift to the right, resulting in a lower equilibrium price and a higher equilibrium quantity. Consumers would benefit from lower prices, leading to an increase in consumer surplus. Producers would also benefit from increased sales and potentially higher profits due to lower production costs.
Overall, the lower costs of production would lead to an increase in supply, a decrease in price, and an increase in quantity supplied in the market.