Question

What does the upward slope of the supply curve reflect?

1) Increase in quantity supplied as price increases
2) Decrease in quantity supplied as price increases
3) Increase in price as quantity supplied increases
4) Decrease in price as quantity supplied increases

Answer 1

The upward slope of the supply curve reflects an increase in quantity supplied as the price increases, demonstrating that higher prices incentivize producers to supply more of a product.

Step-by-step explanation:

The upward slope of the supply curve reflects an increase in quantity supplied as the price increases. This relationship is a fundamental concept in economics, showing that as prices rise, producers are willing to supply more of a good or service, because higher prices can lead to higher potential profits, which incentivize increased production.

When interpreting graphs related to supply, a rightward shift in the supply curve indicates an overall increase in supply, resulting in a decrease in price and an increase in the quantity supplied. Conversely, an upward or leftward shift in the supply curve, often triggered by an increase in costs, implies that at any given price, the quantity supplied will be smaller.

Therefore, the correct response to the student's question is: 1) Increase in quantity supplied as price increases.