Which following change in the coffee market would shift the supply curve to the right?
O A) A study finds that drinking coffee leads to higher grades.
O B) The wage for employees in the coffee business decreases.
O C) The income in the economy increases.
O D) Firms expect the price of coffee to increase in the future.

Question

UpStudy AI · Accepted Answer

1. The supply curve shifts to the right when producers are willing and able to supply a greater quantity at every price level.

2. One factor that can cause the supply curve to shift right is a decrease in production costs (such as wages, raw materials, etc.). A lower cost of production means firms can supply more coffee at each price level.

3. Analyzing each option:

- $$ 	extbf{A)} $$ A study finding that drinking coffee leads to higher grades affects consumer behavior (demand), not the production side (supply).
   
   - $$ 	extbf{B)} $$ A decrease in the wage for employees in the coffee business reduces production costs, enabling firms to supply more coffee at every price level. This directly shifts the supply curve to the right.
   
   - $$ 	extbf{C)} $$ An increase in the income in the economy generally affects demand, particularly for normal goods, by increasing consumers' willingness to purchase coffee, rather than the supply.
   
   - $$ 	extbf{D)} $$ If firms expect the price of coffee to increase in the future, they might hold back on current production to sell later at a higher price, causing a decrease (or leftward shift) in the current supply.

4. Therefore, the correct answer is:

$$ 	extbf{B} $$ The wage for employees in the coffee business decreases.
A decrease in the wage for employees in the coffee business shifts the supply curve to the right.

Upstudy AI Solution

Answer

Solution

The Deep Dive

Related Questions

Latest Economics Questions