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

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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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