Supply Shifts Practice

Government provides subsidies to firms that produce vaccines. What happens to the supply curve for COVID-19 vaccines?

• Supply curve shifts left

• Supply curve shifts right

Answer explanation

A subsidy from the government will lower production costs. This will shift the supply curve for vaccines to the right.

"Government provides subsidies to firms that produce vaccines."

Which determinant of supply is this example?

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New Covid-19 safety rules force some hair salons to close. What happens to the supply curve for haircuts?

• Supply curve shifts left

• Supply curve shifts right

Answer explanation

The new rules cause a decrease in hair salons (some businesses close), so less people can get haircuts. This will cause the supply curve to shift to the left.

"New Covid-19 safety rules force some hair salons to close."

Which determinant of supply is this example?

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The price of cacoa beans, an ingredient in chocolate, plummets. What happens to the supply curve for chocolate?

plummets = decreases quickly

• Supply curve shifts left

• Supply curve shifts right

Answer explanation

If an input price drops, this causes the cost of producing chocolate to fall. The ingredients to make chocolate are cheaper now. The supply curve will shift to the right.

"The price of cacoa beans, an ingredient in chocolate, plummets."

Which determinant of supply is this example?

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Producers believe the price of luggage will increase in 6 months. What happens to the supply curve for luggage IN 6 MONTHS?

• Supply curve shifts left in 6 months (it will shift right NOW)

• Supply curve shifts right in 6 months (it will shift left NOW)

Answer explanation

If luggage producers think the price of luggage will increase in 6 months, they will move some of their supply into storage in the hopes of selling those items later at the higher price. The supply curve will shift to the left NOW and will shift to the right in the FUTURE.

"Producers believe the price of luggage will increase in 6 months."

Which determinant of supply is this example?

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The government imposes a tariff on tennis balls producers. What happens to the supply curve for tennis balls?

• Supply curve shifts left

• Supply curve shifts right

Answer explanation

A tax on producers increases the costs of production. Producers have to pay more to make tennis balls. The supply curve will shift to the left.

"The government imposes a tariff on tennis balls producers."

Which determinant of supply is this example?

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