what would happen to the supplier if government reduce taxes on input prices during process of production assume that on price of community remain constant?
Answers
Explanation:
Key points
Supply curve shift: Changes in production cost and related factors can cause an entire supply curve to shift right or left. This causes a higher or lower quantity to be supplied at a given price.
The ceteris paribus assumption: Supply curves relate prices and quantities supplied assuming no other factors change. This is called the ceteris paribus assumption. This article talks about what happens when other factors aren't held constant.
**Shifts in supply: a car example.** As a result of the higher manufacturing costs, the supply curve shifts to the left, toward \text S_1S
1
start text, S, end text, start subscript, 1, end subscript. Firms will profit less per car, so they are motivated to make fewer cars at a given price, decreasing the quantity supplied.
A decrease in costs would have the opposite effect, causing the supply curve to shift to the right, toward \text S_2S
2
start text, S, end text, start subscript, 2, end subscript. Firms would profit more per car, so they would be motivated to make more cars at a given price, increasing the quantity supplied.
