In the context of microeconomics, what is the most likely effect of lower input costs on the supply curve for a good?

• A. The supply curve shifts to the right, indicating an increase in supply.
• B. The demand curve shifts to the right.
• C. There is no change in the supply curve.
• D. The supply curve shifts to the left, indicating a decrease in supply.

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.
2. Recognize that input costs are the costs of resources used to produce a good, such as labor, raw materials, and capital.
3. Recall that a decrease in input costs reduces production costs, making it cheaper for producers to supply the good at every price level.
4. Apply the principle that when production becomes cheaper, producers are willing to supply more of the good at the same prices, causing the supply curve to shift.
5. Conclude that a decrease in input costs causes the supply curve to shift to the right, indicating an increase in supply.