Question

The graph shows a supply curve.

A graph titled Sample Supply Curve has Quantity supplied on the x-axis and Price on the y-axis. Line S has a positive slope. Line S shifts up and to the left to form line S 1.

Which events could cause the change in supply shown on this graph? Check all that apply.

A producer goes out of business.
A natural disaster causes production to drop.
A new company joins the marketplace.
A company begins to produce more goods.
A resource needed to produce more of the good has became scarce.

Answer 1

Correct choices (cause a leftward/upward shift — supply decreases):

- A producer goes out of business. — yes; fewer suppliers reduces market supply.
- A natural disaster causes production to drop. — yes; damages/output loss lowers supply.
- A resource needed to produce more of the good has become scarce. — yes; higher input scarcity raises costs and reduces supply.

Not correct:

- A new company joins the marketplace. — no; that increases supply (shifts right).
- A company begins to produce more goods. — no; that is an increase in quantity supplied (movement along the curve), not a leftward shift.