A decrease in the prices of inputs will cause which of the following to occur in the short run?

• A. The supply curve will shift to the left, leading to a decrease in quantity supplied at every price.
• B. The demand curve will shift to the right, leading to an increase in quantity demanded at every price.
• C. The supply curve will shift to the right, leading to an increase in quantity supplied at every price.
• D. There will be no change in either the supply or demand curves.

Answer: (C)

Verified step by step guidance

1. Step 1: Understand the relationship between input prices and supply. Input prices are the costs of factors of production (like labor, raw materials) used to produce goods.
2. Step 2: Recall that a decrease in input prices lowers production costs, making it cheaper for firms to produce the same quantity of goods.
3. Step 3: Recognize that when production becomes cheaper, firms are willing to supply more at every price level, which means the supply curve shifts.
4. Step 4: Identify the direction of the supply curve shift. Since production costs decrease, the supply curve shifts to the right, indicating an increase in quantity supplied at every price.
5. Step 5: Confirm that this change affects the supply curve, not the demand curve, because input prices influence producers' costs, not consumers' willingness to buy.