In a competitive market, how do changes in input costs affect the supply curve for a good, holding all else constant?

• A. Higher input costs decrease supply, shifting the supply curve left; lower input costs increase supply, shifting it right.
• B. Changes in input costs affect demand rather than supply, shifting the demand curve instead of the supply curve.
• C. Changes in input costs cause a movement along the supply curve because they change the price of the good.
• D. Higher input costs increase supply, shifting the supply curve right; lower input costs decrease supply, shifting it left.

Answer: (A)

Verified step by step guidance

1. Understand that the supply curve represents the relationship between the price of a good and the quantity supplied by producers, holding other factors constant.
2. Recognize that input costs (such as wages, raw materials, and energy) are part of the production costs for suppliers.
3. When input costs increase, production becomes more expensive, so at every price level, producers are willing to supply less. This causes the supply curve to shift to the left.
4. Conversely, when input costs decrease, production becomes cheaper, so producers are willing to supply more at every price level, shifting the supply curve to the right.
5. Note that these changes shift the entire supply curve rather than causing movement along the curve, which only happens due to changes in the good's own price.