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Question
Macroeconomics
Posted 8 months ago
According to the law of supply, what happens when the price of a good increases?
Choose 1 answer:
(A) The supply curve flattens out.
(B) The quantity supplied increases.
(c) The supply curve shifts to the left.
D People are willing to buy what is supplied.
(E) The supply curve shifts to the right.
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Answer from Sia
Verified answerPosted 8 months ago
Sure, let's address the question from a macroeconomic perspective.
Student's Question:
According to the law of supply, what happens when the price of a good increases?
Choose 1 answer:
(A) The supply curve flattens out.
(B) The quantity supplied increases.
(C) The supply curve shifts to the left.
(D) People are willing to buy what is supplied.
(E) The supply curve shifts to the right.
Solution
a
Law of Supply: The law of supply states that, ceteris paribus, an increase in the price of a good will result in an increase in the quantity supplied
b
Quantity Supplied: When the price of a good increases, producers are willing to supply more of that good to the market. This is represented as a movement along the supply curve, not a shift of the curve itself
Answer
(B) The quantity supplied increases.
Key Concept
Law of Supply
Explanation
According to the law of supply, when the price of a good increases, the quantity supplied also increases. This is because higher prices provide an incentive for producers to supply more of the good to the market. This is represented as a movement along the supply curve, not a shift of the curve itself.
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