PRC-3 · Chapter 10 · Question 6 of 70
A factory producing shoes negotiates a new contract that halves the wages paid to its workers. Assuming all other factors remain constant, what will happen in the shoe market?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) The supply curve for shoes will shift to the right
Explanation
A decrease in the cost of production (lower wages) makes it cheaper to produce the good, shifting the supply curve to the right (increase in supply).
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