How many of the following statements about the supply curve of a firm…

How many of the following statements about the supply curve of a firm under perfect competition are correct?

(A) Technological progress shifts the firm’s supply curve to the right.
(B) A fall in the prices of inputs shifts the firm’s supply curve to the left.
(C) The imposition of a unit tax shifts the firm’s supply curve to the left.
(D) A rise in the market price of the good shifts the firm’s supply curve to the right.
(E) An increase in the number of firms in the market shifts each firm’s supply curve to the right.

Answer & explanation

Correct answer: option 2

The correct answer is Option (2) → Two

A firm’s supply curve shifts only when something moves its MC curve. Statements (A) and (C) are correct.

(A) Technological progress shifts the firm’s supply curve to the right. — Correct. Better technology lowers MC at every output, so the firm supplies more at each price.

(B) A fall in the prices of inputs shifts the firm’s supply curve to the left. — Incorrect. Cheaper inputs lower the cost of production and the MC, so the supply curve shifts to the right.

(C) The imposition of a unit tax shifts the firm’s supply curve to the left. — Correct. The tax raises the cost of each unit, so MC rises and the firm supplies less at each price.

(D) A rise in the market price of the good shifts the firm’s supply curve to the right. — Incorrect. The supply curve already shows the output at every price. A higher price is a movement along the same curve.

(E) An increase in the number of firms in the market shifts each firm’s supply curve to the right. — Incorrect. More firms shift the market supply curve to the right. Each firm’s own supply curve depends on its own MC, which does not change.

NCERT (2026-27): “4.5 Determinants of a Firm’s Supply Curve In the previous section, we have seen that a firm’s supply curve is a part of its marginal cost curve. Thus, any factor that affects a firm’s marginal cost curve is of course a determinant of its supply curve.”

“Summary … Technological progress is expected to shift the supply curve of a firm to the right.
An increase (decrease) in input prices is expected to shift the supply curve of a firm to the left (right).
The imposition of a unit tax shifts the supply curve of a firm to the left.”

“4.6 Market Supply Curve … As the number of firms changes, the market supply curve shifts as well. Specifically, if the number of firms in the market increases (decreases), the market supply curve shifts to the right (left).”