Which of the following could cause a shift to the left of the supply curve? A. Population increases. B. The price of a substitute increases. C. The government places regulations on a good. D. The...

Which of the following could cause a shift to the left of the supply curve?

A.

Population increases.
B. The price of a substitute increases.
C. The government places regulations on a good. D. The cost of an input decreases

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

Posted on

The best answer to this is C, as long as we assume that the regulation that you mention has been placed on the good whose supply curve we are discussing.  In other words, if the government places regulations on the production of blue jeans, the supply of blue jeans will decrease (and the curve will move to the left).

When a regulation is imposed, it typically results in an increase in the price of the production of the good.  In other words, if the government says that the jeans must have 8 rivets instead of 4, or if they say the jeans must be made fireproof, it will cost more to comply with the regulations.  When this happens, the supply curve will move to the left, all other things being equal.

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