An increase in productivity should ?
Correct answer: C. Lead to a shift in supply outwards (i.e more supplied at each and every price)
- A. Lead to a contraction of supply
- B. Lead to an expansion of supply
- C. Lead to a shift in supply outwards (i.e more supplied at each and every price)
- D. Lead to a higher equilibrium and lower equilibrium quantity
Explanation
Higher productivity lowers the unit cost of production and enables firms to supply more at every price. That is an outward or rightward shift of the supply curve, not merely an expansion along it.
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Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
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