Firm A produces jeans and shirts .how will an increase in the price of jeans affect the supply cuve of shirts
Hey Shabia,
With increase in the price of jeans, the production of jeans will increase as it will be more profitable to produce jeans than shirts. Therefore, the firm would shift its resources from the production of shirts towards jeans. Hence, the supply curve for shirts will shift towards the left.
With increase in the price of jeans, the production of jeans will increase as it will be more profitable to produce jeans than shirts. Therefore, the firm would shift its resources from the production of shirts towards jeans. Hence, the supply curve for shirts will shift towards the left.