Question

In the following figure, the supply curve shifts from SS to S1S1 due to what reason? 

• A. Decrease in taxes
• B. Upgradation of technology
• C. Fall in the price of inputs
• D. All of these

Hint:

Factors such as a decrease in taxes, advancements in technology, and a fall in the price of inputs can all reduce production costs, leading to an increase in supply and a rightward shift in the supply curve.

Answer 1

The Correct Option is D

Step 1: Understanding Shifts in the Supply Curve:
The supply curve can shift due to changes in the cost of production, which includes factors like the price of inputs, taxes, and technological advancements. A shift in the supply curve indicates a change in the quantity supplied at every price level. A rightward shift in the supply curve (increase in supply) occurs when production becomes cheaper or more efficient. A leftward shift (decrease in supply) occurs when production becomes more expensive.
Step 2: Analyzing the Options:
- Option (A) Decrease in taxes: A decrease in taxes on production or sales would lower the cost of production, leading to an increase in supply and a rightward shift in the supply curve.
- Option (B) Upgradation of technology: Technological improvements make production more efficient, reducing costs and increasing supply, leading to a rightward shift in the supply curve.
- Option (C) Fall in the price of inputs: A fall in the price of inputs, such as raw materials or labor, decreases production costs, leading to an increase in supply and a rightward shift in the supply curve.
- Option (D) All of these: This is the correct answer. All of the listed factors (decrease in taxes, upgradation of technology, and fall in the price of inputs) would lead to a rightward shift in the supply curve by reducing production costs and increasing supply.
Step 3: Conclusion and Answer:
The correct answer is (D) because all of the listed factors can lead to a rightward shift in the supply curve by reducing the cost of production.