When the supply curve shifts to the right, what does it indicate?

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BlackTom AI · Accepted Answer

Restating the scenario helps set the stage for evaluation.
Question: When the supply curve shifts to the right, what does it indicate?
Options:
- A: A shortage in the market.
- B: An increase in supply at all price levels.
- C: A decrease in supply at all price levels.
- D: An increase in demand.

Now, let's analyze each option one by one with reasoning.

Option A — A shortage in the market.
A shortage occurs when quantity demanded exceeds quantity supplied at a given price, not simply from a shift of the supply curve to the right. A rightward shift signals more supply, which tends to ease shortages, or even create a surplus if demand remains constant. Therefore, this statement misattributes the effect of a supply shift to scarcity conditions.

Option B — An increase in supply at all price levels.
This is the core meaning of a rightward shift in the supply curve: at every price, a greater quantity is supplied than before. The drivers can include lower costs, better technology, or an expectation of higher profits, all of which expand supply. This option correctly captures the standard depiction of a rightward shift.

Option C — A decrease in supply at all price levels.
A decrease in supply would shift the supply curve to the left, not to the right. A leftward shift indicates less being supplied at each price, so labeling it as a rightward shift would be incorrect and contradicts the basic directional interpretation of supply shifts.

Option D — An increase in demand.
An increase in demand would shift the demand curve to the right, not the supply curve. This option confuses the two curves; changes in demand affect willingness to purchase at each price, while the observed shift in the supply curve reflects producers’ behavior, costs, and market conditions affecting supply.

In summary, the rightward shift in the supply curve is best interpreted as a higher quantity supplied across all price levels, whereas the other options describe shortages, leftward supply shifts, or shifts in demand rather than supply.

When the supply curve shifts to the right, what does it indicate?

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