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2 votes
Which scenario does this graph illustrate?

Companies need to maximize production, so they will produce less and charge more.

Companies want to make money, so they increase production as price increases.

Consumers need to spend wisely, so they will purchase more goods at a lower cost.

Consumers want a good deal and will pay more money for a quality product.

User Ardi
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2 Answers

6 votes

Answer:

Companies want to make money, so they increase production as price increases.

Step-by-step explanation:

The question is incomplete. The complete question is as follows.

The bookstore is overstocked with old fantasy novels. It needs to get rid of the novels to make room for newly published fantasy novels. The scenario is given in the chart. Which scenario does this graph illustrate?

The graph shows a positively sloped supply curve for fantasy novels. A positively sloped supply curves shows that the company will product more as price increases (higher price gives them more revenue).

Option A is incorrect as it is opposite the relationship between price and supply. Option C is irrelevant as we are talking about supply curve here and not the demand curve. It’s a simple supply diagram and doesn’t mention about quality, hence option D is incorrect too. Option B on the other hand talks about the relationship between price and supply from the company's perspective. It’s obvious that the company will increase production as price increases and that is precisely why the supply curve is positively sloped.

Therefore, Option B is the correct answer.

User CesarGon
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7.1k points
5 votes
This graph illustrates :
Companies want to make money, so they increase production as price increases.
User Benno Eggnauer
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