Supply Curve Shifts from Cost and Efficiency Changes

Steps:

• Define downward shift: indicates increased supply at every price, often from lower production costs or higher efficiency.
• Identify supply shifters: improvements like productivity gains reduce costs and boost output.
• Evaluate options: check if each raises or lowers production costs.
• Select matching option: only productivity rise fits downward shift.

Why B is correct:

• Higher labor productivity lowers per-unit costs (via output per worker formula: total output / labor input), increasing supply per law of supply.

Why the others are wrong:

• A: Higher transport costs raise total production expenses, shifting supply upward.
• C: Increased sales tax raises effective seller costs, decreasing supply.
• D: Higher wages increase input costs, reducing supply.

Final answer: B