Answer to Question #246363 in Microeconomics for SREE

Question

Select a product. Provide five factors that could cause a leftward shift to the supply curve of your chosen product. Support your answers with relevant examples and explanation for each factors given.

Answer 1

Woolen sweaters.

Factors that could cause a leftward shift in the supply of woolen sweaters include:

• Decrease in price of substitute goods. For instance, when the price of cotton sweaters fall, more of them will be demanded than the quantity demanded of woolen sweaters. The supply of woolen sweaters will thus be reduced because of decline in demand for them.
• Cost of production. Wool is the raw material used in the production of woolen sweaters and when the price of wool is increased, the production cost will be high and thus less quantity of woolen sweaters will be produced. Hence less will be supplied.
• Government policies. For instance, when the government withdraws subsidies from a company that produces woolen sweaters, the cost of production will be entirely upon the company and it Will be high and thus the supply will be cut down due to low production. This is because the company won't be able to cater for consistently high costs of production.
• Technology. When outdated technology is employed in production rather than advanced modern technology, it is most likely that the output of production will be low and thus the supply of woolen sweaters will be cut down, thus shifting the supply curve to the left.
• Natural conditions.For instance, if climate changes are experienced , and it becomes hotter or warmer for a long period of time, the demand for woolen sweaters will decrease and this will result in less of them being supplied.