O-LevelEconomicsThe allocation of resources2281/11 · May/June 2011 · Q71 Mark

Due to changes in the costs of production, an industry's supply curve shifted at various times from S₁ to either S2 or S3. [Figure] If a shift in supply was due to a seasonal increase in the cost of raw materials, what would have been the effect on demand?

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AThe demand curve would move from D₁ to D2.

BThe quantity demanded would move from x to w.

CThe quantity demanded would move from x to y.

DThe quantity demanded would remain the same at x.

✓ Correct answer

B: The quantity demanded would move from x to w.

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Topic: The allocation of resources, O-Level Economics (syllabus 2281). Multiple choice, 1 mark.
Source: O-Level Economics, May/June 2011 Paper 1 Variant 1, question 7.

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