Which one of the following would increase per-unit production cost and therefore shift the aggregate supply curve to the left?
A) A reduction in business taxes.
B) Production bottlenecks occurring when producers near full plant capacity.
C) An increase in the price of imported resources.
D) Deregulation of industry.

Question

Quizplus · Accepted Answer

An increase in the price of imported resources would raise the cost of production for firms that rely on those resources, leading to an increase in their per-unit production cost. This would cause a leftward shift of the aggregate supply curve, as firms are less willing to produce at any given price level. A reduction in business taxes (choice A) or deregulation of industry (choice D) would lower costs for firms and lead to a rightward shift in the aggregate supply curve. Production bottlenecks occurring when producers near full plant capacity (choice B) would also increase per-unit production cost, but it would not necessarily shift the aggregate supply curve to the left.

Which One of the Following Would Increase Per-Unit Production Cost