Question

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

Likely the graph shows a leftward (decrease) in supply. The events that would cause that are:

- A producer goes out of business.
- A natural disaster causes production to drop.
- A resource needed to produce the good becomes scarce.

The other two (a new company joining the market; a company producing more goods) would increase market supply (rightward shift), not decrease it.