A decrease in the price of a nonlabor input such as electricity will cause
A) a movement down the SRAS curve.
B) a movement up the SRAS curve.
C) a leftward shift in the SRAS curve.
D) a rightward shift in the SRAS curve.
E) no change regarding the SRAS curve.

Question

Quizplus · Accepted Answer

A decrease in the price of a nonlabor input, such as electricity, reduces production costs for businesses. This makes it cheaper for them to produce goods and services at every price level, leading to an increase in the quantity supplied. This is represented by a rightward shift in the Short-Run Aggregate Supply (SRAS) curve, indicating that at the same price levels, more goods and services can be produced and supplied.

A Decrease in the Price of a Nonlabor Input Such