Figure 4-6

Refer to Figure 4-6. The shift from S' to S could be caused by

Question

Figure 4-6

Refer to Figure 4-6. The shift from S' to S could be caused by

BlackTom AI · Accepted Answer

To approach this question, I will evaluate what causes a rightward shift in the supply curve from S' back to S in figure 4-6, considering standard supply-shift drivers.
Option 1: a decrease in income. Typically, changes in income affect demand, not supply. A lower income might reduce quantity demanded, which would move along the supply curve or affect equilibrium price and quantity through demand shifts, but it does not directly shift the entire supply curve S or S' upward or downward. Therefore, this option is not a primary driver of a supply shift.
Option 2: an improvement in production technology. When production technology improves, it becomes cheaper or easier to produce each quantity of output. This effectively increases producers' willingness to supply at every price, shifting the supply curve to the right (from S' to S). This matches the standard analysis that a positive technological change increases supply and shifts the curve outward.
Option 3: a decrease in the number of sellers. Fewer sellers in the market reduce overall market supply, which would shift the supply curve to the left, not to the right. Since the graph shows a shift from S' to S (a rightward shift), this option is inconsistent with the observed direction of shift.
Option 4: a decrease in the price of the good. A change in the price of the good itself causes a movement along the supply curve, not a parallel shift of the entire curve. A decrease in price would typically reduce the quantity supplied along the same supply curve rather than shifting S or S'. So this option does not explain a shift of the supply curve.
In summary, among the options, only an improvement in production technology acts as a supply-side factor that shifts the entire supply curve to the right, producing the observed shift from S' to S. The other options either affect demand, reduce market supply via fewer sellers, or merely cause movement along the curve rather than a shift.

Figure 4-6 Refer to Figure 4-6. The shift from S' to S could be caused by

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