Question

which of the following will cause an outward (rightward) shift in supply?
a. a decline in labor productivity.
b. the cost of an input increases.
c. a technological improvement.
d. a reduction in consumer incomes.

Explanation:

• Option A: A decline in labor productivity means firms can produce less with the same resources, so supply would shift left, not right.
• Option B: An increase in input costs (like raw materials or labor costs) increases production costs, so firms supply less at each price, shifting supply left.
• Option C: Technological improvement makes production more efficient, allowing firms to produce more at each price level, which causes the supply curve to shift right (outward).
• Option D: A reduction in consumer incomes affects demand (not supply directly) as it changes how much consumers can buy, not how much firms can produce.

Answer:

C. A technological improvement.