The wages paid to milkshake makers increases. Does the supply curve for milkshakes shift? If so, does it shift to the right or to the left?

Question

Haley Bruce

Business

15 December, 01:52

The wages paid to milkshake makers increases. Does the supply curve for milkshakes shift? If so, does it shift to the right or to the left?

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Zack Garner · Answer 1

Answer: The supply curve will shift ot the left if wages paid to milkshake makers increase.

When the wages paid to workers increase, the cost of producing a product also increases.

If the supplier continues to sell at the price before the wage increase, he will earn less profits than before, so he will not be motivated to produce as many units of the product as he was producing before.

In order to produce as many units as he was producing before the wage increase, he will look achieve the at least the same amount of profit as before. So, he'll be willing to supply the same quantity of goods only at a higher price per unit. Hence the supply curve will shift to the left.