How does a decrease in input costs typically affect suppliers in a competitive market?

• A. It causes the demand curve to shift to the right.
• B. It has no effect on the supply curve.
• C. It decreases the supply, shifting the supply curve to the left.
• D. It increases the supply, shifting the supply curve to the right.

Answer: (D)

Verified step by step guidance

1. Understand the relationship between input costs and supply: Input costs are the expenses producers incur to create goods or services. When input costs decrease, producing each unit becomes cheaper.
2. Recall the law of supply: If production becomes less costly, suppliers are willing to produce and sell more at each price level, which means the quantity supplied increases.
3. Analyze the supply curve shift: An increase in supply is represented by a rightward shift of the supply curve, indicating that at every price, a larger quantity is supplied.
4. Distinguish supply shifts from demand shifts: Changes in input costs affect supply, not demand. Therefore, the demand curve remains unchanged and does not shift.
5. Conclude the effect: A decrease in input costs leads to an increase in supply, shifting the supply curve to the right, which typically results in a lower equilibrium price and higher quantity sold.