Resource X is necessary to the production of good Y.If the price of resource X rises,
A) the supply curve of Y shifts leftward.
B) the supply curve of Y shifts rightward.
C) the supply curve of Y is unaffected.
D) there is a movement down the supply curve of Y.
E) there is a movement up the supply curve of Y.

Question

Quizplus · Accepted Answer

When the price of resource X rises, the cost of producing good Y increases. As a result, firms may reduce their output or even exit the market, leading to a decrease in the supply of Y. Therefore, the supply curve of Y shifts leftward.

Resource X Is Necessary to the Production of Good Y