Question

for the following seenarios, explain what direction the supply curve would shift (left - decrease, right - increase) and tell why using the stoner factors - subsidies and taxes, technology, other goods, number of sellers, expectations, and resource cost. then illustrate each on a graph.

1. a new machine, which makes the production of cars cheaper, was installed in a detroit car factory.
2. a new government tax was added to the production of cars in detroit.
3. several car factories around the united states goes out of business.
4. the government offers a subsidy on the production cheddar cheese so that schools will provide more calcium for students.
5. producers of cheese also produce butter. the price of butter increases.
6. the cost of milk, a resource used in the production of cheese and butter, increases.
7. bicycle producers expect an increase in the popularity of bicycles as a means of transportation becau gas prices continue to rise.

Explanation:

1. Shift Direction: Right - increase. Reason: New machine (Technology factor) reduces production cost, allowing more cars to be supplied at each price.
2. Shift Direction: Left - decrease. Reason: New tax (Subsidies and taxes factor) increases production cost, reducing the quantity supplied at each price.
3. Shift Direction: Left - decrease. Reason: Fewer car factories (Number of sellers factor) means less overall supply of cars.
4. Shift Direction: Right - increase. Reason: Subsidy (Subsidies and taxes factor) lowers production cost for cheddar cheese, increasing supply.
5. Shift Direction: Left - decrease (for cheese). Reason: Producers shift resources to butter (Other goods factor) due to higher butter price.
6. Shift Direction: Left - decrease. Reason: Higher milk cost (Resource cost factor) increases production cost for cheese and butter, reducing supply.
7. Shift Direction: Right - increase. Reason: Expectation (Expectations factor) of higher future demand (due to gas prices) leads producers to increase current supply.

Answer:

1. Right - increase (Technology).
2. Left - decrease (Subsidies and taxes).
3. Left - decrease (Number of sellers).
4. Right - increase (Subsidies and taxes).
5. Left - decrease (Other goods).
6. Left - decrease (Resource cost).
7. Right - increase (Expectations).