The wage rate paid by Easy Day producers falls, and at the same time, the price of raw material used in the production of Easy Day rises. You predict that the supply curve of Easy Day will

Surely shift leftward
Surely become steeper
Shift either leftward or rightward
Surely shift rightward

The correct answer is: C. Shift either leftward or rightward.

The supply curve of Easy Day will shift either leftward or rightward, depending on which of the two effects is stronger: the decrease in the wage rate or the increase in the price of raw materials.

If the decrease in the wage rate has a stronger effect, then the supply curve will shift rightward, as producers will be able to produce Easy Day at a lower cost and will therefore be willing to supply more of it.

If the increase in the price of raw materials has a stronger effect, then the supply curve will shift leftward, as producers will be able to produce Easy Day at a higher cost and will therefore be willing to supply less of it.

In the absence of more information, it is impossible to say which effect will be stronger and therefore which way the supply curve will shift.

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