passwella.
Menu

JAMB Economics 1981 Question 10

Question 10

Theory of Supply

In the above diagram, SoSo is the original supply curve while S1S1 is the new curve. Which of the following does S1S1 represent?

Diagram for this question
  1. A.A movement along a given supply curve
  2. B.An increase in supply
  3. C.A decrease in supply
  4. D.A perfectly elastic supply curve
  5. E.An abnormal supply curve.
Show the answer and explanation

Answer: C (A decrease in supply)

Explanation

S1S1 lies to the left of (above) SoSo, so less is supplied at each price: supply has decreased.