Using the supply curve shifters (SPEND) explain whether each of the following wi

Question

Using the supply curve shifters (SPEND) explain whether each of the following will increase or decrease the supply of cell phones. Tell whether the supply curve shifts to the right or to the left. a. The market price of the glass used in cell phone screens increases. b. The number of firm that make cell phones increases. c. Cell phone manufacturers expect the market price of cell phones to increase next month. FontSize Sexton, R. L. (2013). Exploring economics (6th ed.). Mason, OH: South-Western, Cengage Learning.

Explanation / Answer

(a) Higher price of glass will raise the cost of input, increasing production cost, which will reduce the market supply of cell phones. The supply curve shifts to left.

(b) Higher number of cell phone firms will increase market supply, and supply curve will shift to right.

(c) Higher expected future price will encourage suppliers to produce (and sell) less output in current month, since they can sell their output at higher price in next month. So current output will decrease, and market supply curve will shift to left.

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