Question

A shift in the supply curve of bicycles resulting from higher steel prices will lead to:

a. higher prices of bicycles.
b. lower prices of bicycles.
c. a shift in the demand curve for bicycles.
d. larger output of bicycles.
e. no change in the price of bicycles.

Answer 1

Answer: Higher price of bicycles

Explanation: Higher steel prices will lead to a rise in the input cost of the producers of bicycles. As a result of this, the supply for bicycles will decline shifting the supply curve upward to the left. With no information given about change in the demand for bicycles, the demand curve will not change.

The net effect will be an increase in the price of bicycles.