Economics 9708 · AS & A Level · Income elasticity of demand

Income elasticity of demand — practice question

The soap industry includes a number of firms. Firm X accounts for a small share of total output. What is most likely to make the supply curve for firm X move to the right while the market supply curve moves to the left?

  • AFirm X has improved technology while other firms have higher input costs.
  • BFirm X has to pay a large fine for polluting a river while other firms have a tax reduction.
  • CFirm X is involved in a strike while other firms enter the industry.
  • DFirm X’s rent and interest charges increase while other firms receive a government subsidy.

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