Chapter 69, Problem 2MCQ

To determine

The correct option which will shift a factor’s demand curve to the right.

Answer to Problem 2MCQ

From the available options, the correct option is “e”, an increase in the price of the good being produced.

Explanation of Solution

As the change in factors affects the demand curve to shift, this causes the lower or higher quantity at a certain price. Therefore, the change in factor leads to an increase in the factor’s marginal product, which means option c is incorrect. And, a technological advancement without replacing the factor also changes the factors’ demand curve to the right which means option a is also not correct. The factor’s demand curve shifts to the right when there is an increase in the demand for the good being produced which indicates option b is incorrect. Moreover, an increase in the price of the factor leads the demand curve to the right. Therefore, the correction option is e (an increase in the price of the good being produced) because an increase in the price of a commodity produced results in the factor’s demand curve shifting to the right.

Economics Concept Introduction

Introduction: A demand curve is a graphical representation that shows how sensitive demand is toward the price of a good or service.