Paper 2 · supply

The diagram shows supply curves for commodity X. The shift of the supply curve from $S_1$ to $S_2$ could be caused by

Aa government subsidy to producers of X.

Bimproved techniques of production of X.

Ca fall in the prices of raw materials used in manufacturing X.

Dan increase in the wage rates paid to workers in the industry for X.

Explanation: An increase in wage rates increases costs of production thereby reducing supply, shifting the supply curve to the left (from S1 to S2).

ZIMSEC Economics Paper 2, November 2010, Q4

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