Question

An increase in the prices of factors of production leads to ______.

Options

• rightward shift to the supply curve

• expansion in supply

• leftward shift in supply curve

• contraction in supply

Answer 1

An increase in the prices of factors of production leads to leftward shift in supply curve.

Explanation:

Higher factor prices raise production costs and reduce the quantity firms are willing to supply at each commodity price. This decreases supply and shifts the supply curve leftward.