Which of the following would cause the short-run aggregate supply (SRAS) curve to decrease (shift to the left)?

• A. An improvement in technology
• B. A reduction in the minimum wage
• C. An increase in the price of raw materials
• D. A decrease in business taxes

Answer: (C)

Verified step by step guidance

1. Step 1: Understand what causes the short-run aggregate supply (SRAS) curve to shift. The SRAS curve shifts when there is a change in production costs or factors that affect firms' willingness and ability to supply goods at different price levels.
2. Step 2: Identify factors that decrease SRAS (shift it to the left). These typically include increases in input prices (like wages or raw materials), higher taxes on production, or negative supply shocks that raise production costs.
3. Step 3: Analyze each option: An improvement in technology usually lowers production costs, shifting SRAS to the right (increase). A reduction in the minimum wage lowers labor costs, also shifting SRAS to the right. An increase in the price of raw materials raises production costs, shifting SRAS to the left. A decrease in business taxes reduces costs, shifting SRAS to the right.
4. Step 4: Conclude that the only option that causes SRAS to decrease (shift left) is an increase in the price of raw materials because it raises firms' costs and reduces the quantity of goods supplied at each price level.
5. Step 5: Remember that shifts in SRAS reflect changes in production costs, so any factor that increases these costs shifts SRAS left, while factors that reduce costs shift it right.