Supply Curve Shifts Right Due to Cost Changes

Steps:

• Identify shift direction: S1 to S2 indicates rightward movement, increasing supply at each price.
• Recall supply shifters: Factors like input costs, taxes, or technology affect supply, not demand.
• Match options to shifters: Evaluate which causes increased supply.
• Select best fit: Lower costs align with rightward shift.

Why A is correct:

• A decrease in airline costs reduces production expenses, increasing quantity supplied at each price and shifting the supply curve right, per the law of supply.

Why the others are wrong:

• B: Affects demand for flights, shifting demand curve, not supply.
• C: Raises demand for air travel by making alternatives costlier, shifting demand right, not supply.
• D: Higher taxes increase costs, decreasing supply and shifting curve left.

Final answer: A