Question

In Fig 3-9, the current position of the supply curve is S1, and the price of a portable power bank is $3. If the cost of inputs that suppliers utilize to produce portable power banks decreases, will the supply curve shift to S2 or to S3? What is the change in the amount of portable power banks supplied?

Short answer

S2

Increases by 3 units.

Step-by-step solution

Step1. Introduction 

Supply schedule or the supply function is the representation of individual as well as combined supply of portable power bank.

Law of supply establishes a direct relationship between prices and the quantity supplied.

Step2. Explanation

Since, the input cost has reduced, it means they can now produce more by incurring the same cost of production and hence, supply of power banks in the market increases. This shifts the supply curve to S2 to the right.

The change in supply is from 6 units to 9 units, i.e. an increase of 3 units.