Consider the basic AD/AS model. If there is a decrease in the cost of non- labour inputs to production, the result will be to
A)shift the AS curve to the left.
B)shift the AS curve to the right.
C)shift the AD curve to the right.
D)shift the AD curve to the left.
E)cause a movement to the left along the AS curve.

Question

Quizplus · Accepted Answer

An decrease in the cost of non-labour inputs to production will lower the overall cost of producing output, resulting in a rightward shift of the AS curve. This is because firms will be willing to supply more output at any given price level due to the lower costs involved in production. Therefore, option B is the correct choice.

Consider the Basic AD/AS Model