Supply is the quantity producers are willing to produce at each price. If production costs fall, the supply curve:

Supply is the quantity producers are willing to produce at each price. If production costs fall, the supply curve:

• A. Shifts to the right, increasing supply.
• B. Shifts to the left, decreasing supply.
• C. Becomes steeper along the same curve.
• D. Does not change.

Answer: (A)

Lower production costs make it cheaper to produce each unit, so firms are willing to supply more at every price. That extra willingness shifts the entire supply curve to the right, representing an increase in supply. It’s a shift, not a movement along the curve, because the change comes from costs, not a change in the price itself. The other ideas would imply a decrease in supply, no change, or just a change in the curve’s steepness, which doesn’t occur with a fall in production costs.

Lower production costs make it cheaper to produce each unit, so firms are willing to supply more at every price. That extra willingness shifts the entire supply curve to the right, representing an increase in supply. It’s a shift, not a movement along the curve, because the change comes from costs, not a change in the price itself. The other ideas would imply a decrease in supply, no change, or just a change in the curve’s steepness, which doesn’t occur with a fall in production costs.