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A Level Economics (9708)•9708/12/M/J/21
Question 7 from 9708/12/M/J/21

Explanation

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

Topic: Demand and supply curves

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