ECONOMICS
SUPPLY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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The lower the price, the larger the quantity produced.
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A smaller the quantity will be produced because the price is higher.
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The lower the price, the smaller the quantity produced.
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Price doesn’t affect the manufacturers production of a good.
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Detailed explanation-1: -The law of supply relates price changes for a product with the quantity supplied. In contrast with the law of demand the law of supply relationship is direct, not inverse. The higher the price, the higher the quantity supplied. Lower prices mean reduced supply, all else held equal.
Detailed explanation-2: -Economists call this positive relationship between price and quantity supplied-that a higher price leads to a higher quantity supplied and a lower price leads to a lower quantity supplied-the law of supply.
Detailed explanation-3: -The law of supply says that a higher price will induce producers to supply a higher quantity to the market. Because businesses seek to increase revenue, when they expect to receive a higher price for something, they will produce more of it.
Detailed explanation-4: -DEFINITION-Law of supply states that other factors remaining constant, price and quantity supplied of a good are directly related to each other. In other words, when the price paid by buyers for a good rises, then suppliers increase the supply of that good in the market.
Detailed explanation-5: -Excess Demand: the quantity demanded is greater than the quantity supplied at the given price. This is also called a shortage. Excess Supply: the quantity demanded is less than the quantity supplied at the given price. This is also called a surplus.