Answer to Question #89023 in Macroeconomics for alluta

Question

discuss a factor that could cause an inward shift

Answer 1

An inward shift means the decrease of Supply curve. It can be caused by a variety of factors. Some of them are related to the production costs, for example:

1) growth of labour or capital cost;

2) increase in indirect taxes.

Also supply curve position can depend on some limiting factors. So, an inward shift can be caused by the following reasons:

1) natural disasters, which may destroy some of the inputs in the production;

2) changes in technology or construction, that can cause the reduce the amount of available resources or productivity;

3) legal restrictions;

4) decrease of the total amount of firms on the market.