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WAEC Economics 2015 Question 7

Question 7

Theory of Supply

If the price of flour rises, then bread's

  1. A.demand curve will shift to the left while supply curve will shift to the right.
  2. B.supply curve will shift to the left.
  3. C.supply curve will shift to the right.
  4. D.demand curve will shift to the right while supply curve remains unchanged.
Show the answer and explanation

Answer: B (supply curve will shift to the left.)

Explanation

Flour is an input for bread; dearer flour raises the cost of baking, so the supply of bread falls (shifts left).