54.

In the diagram, a shift from AS1 to AS2 might be caused by

A. stricter government regulations.
B. an increase in the prices of imported resources.
C. a decrease in the prices of domestic resources.
D. an increase in business taxes.

Question

54.

In the diagram, a shift from AS1 to AS2 might be caused by

A. stricter government regulations.
B. an increase in the prices of imported resources.
C. a decrease in the prices of domestic resources.
D. an increase in business taxes.

BlackTom AI · Accepted Answer

To understand the shift from AS1 to AS2 in the graph, we need to consider what changes in the economy move the aggregate supply curve to the right.
Option A: Stricter government regulations. Higher regulatory burden typically increases costs for firms, reducing supply and shifting AS to the left, not to the right. So this would not explain a shift from AS1 to AS2.
Option B: An increase in the prices of imported resources. More expensive inputs raise production costs, which also tends to shift the aggregate supply curve leftward, not rightward.
Option C: A decrease in the prices of domestic resources. Lower input costs reduce production costs for firms, making them able to supply more at every price level. This shifts the aggregate supply curve to the right, from AS1 toward AS2, which matches the diagram.
Option D: An increase in business taxes. Higher taxes on firms raise costs and reduce profitability, leading to a leftward shift of AS rather than a rightward shift.
Overall, only option C describes a scenario that would plausibly move the AS curve to the right (AS1 to AS2) by lowering production costs, while the other options describe cost-increasing factors that would shift AS left instead.

ECNM1115.32542.202530 Spring 2025 Test 3 March 28

54. In the diagram, a shift from AS1 to AS2 might be caused by A. stricter government regulations. B. an increase in the prices of imported resources. C. a decrease in the prices of domestic resources. D. an increase in business taxes.

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