Which of the following statement/statements are true?
Statement 1: Price and quantity will change in same direction when there is a shift in supply curve and demand curve remains the same and when the number of firms is fixed.
Statement 2: Increase in input prices will lead to leftward shift of supply curve.

Statement 2 is true and Statement 1 is false

The correct answer is option 4: Statement 2 is true and Statement 1 is false

• Statement 1: "Price and quantity will change in the same direction when there is a shift in the supply curve and the demand curve remains the same, and when the number of firms is fixed." ❌ (False)

  • If the supply curve shifts right (increase in supply), the price will decrease, and the quantity will increase.

  • If the supply curve shifts left (decrease in supply), the price will increase, and the quantity will decrease.

  • Therefore, price and quantity change in opposite directions, not the same direction. So, statement 1 is false.

• Statement 2: "Increase in input prices will lead to a leftward shift of the supply curve." ✅ (True)

  • When input costs (raw materials, wages, etc.) increase, firms produce less because production becomes more expensive.
  • This leads to a leftward shift of the supply curve, meaning higher prices and lower equilibrium quantity.
  • Since this is a correct explanation of how input costs affect supply, statement 2 is true.