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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
MCQ
Solution
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.
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Concepts of Production Possibility Frontier
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