Question

Which of the following is the result of increase in price of factors of production?

Options

• A rightward shift in the supply curve

• Leftward shift in supply curve

• Expansion in supply

• Contraction in supply

Answer 1

A rightward shift in the supply curve

Explanation:

When the price of factors of production such as land and labour rises, the cost of production rises, and hence supply reduces. As a result, the supply curve moves to the left.