Which factor contributes to a leftward shift in the short-run aggregate supply curve?

Which factor contributes to a leftward shift in the short-run aggregate supply curve?

• A. Decrease in technology
• B. Increase in resource costs
• C. Decrease in labor productivity
• D. Increase in consumer demand

Answer: (B)

The leftward shift in the short-run aggregate supply curve indicates a decrease in the overall supply of goods and services in the economy at every price level. An increase in resource costs directly impacts production because it raises the expenses that firms face when creating goods and services. When resource costs climb, businesses may find it less profitable to produce the same quantity of output. Consequently, this leads to a reduction in the quantity of goods supplied at any given price, resulting in a leftward shift of the aggregate supply curve. This situation can result from various scenarios, such as rising wages, increased prices for raw materials, or other input costs. As production becomes more expensive, firms may cut back on their output, ultimately impacting supply levels in the economy. Therefore, an increase in resource costs is a primary factor that would shift the short-run aggregate supply curve to the left.

The leftward shift in the short-run aggregate supply curve indicates a decrease in the overall supply of goods and services in the economy at every price level. An increase in resource costs directly impacts production because it raises the expenses that firms face when creating goods and services. When resource costs climb, businesses may find it less profitable to produce the same quantity of output. Consequently, this leads to a reduction in the quantity of goods supplied at any given price, resulting in a leftward shift of the aggregate supply curve.

This situation can result from various scenarios, such as rising wages, increased prices for raw materials, or other input costs. As production becomes more expensive, firms may cut back on their output, ultimately impacting supply levels in the economy. Therefore, an increase in resource costs is a primary factor that would shift the short-run aggregate supply curve to the left.