Question

Which of the following statements describes movement along a supply curve? A. The market price of a good decreases, leading suppliers to lower their quantity supplied. B. Suppliers decrease their quantity supplied at every price level because of a factor cost increasing. C. Consumers increase their quantity demanded in response to a price decrease. A. government tax increases, causing suppliers to charge more for every quantity of output.

Answer 1

Option A, 'The market price of a good decreases, leading suppliers to lower their quantity supplied.', accurately describes movement along a supply curve, which occurs when the price changes, leading to a different quantity being supplied without shifting the curve itself.

Step-by-step explanation:

Movement along a supply curve refers to changes in the quantity supplied that are caused only by a change in the product’s price. Option A correctly describes such a movement: “The market price of a good decreases, leading suppliers to lower their quantity supplied.” When the price of a good decreases, firms are willing to supply less of it at the new lower price, and this movement is represented by a movement up and to the left along the same supply curve.

Option B and D describe situations where factors other than the price of the good itself are changing, such as a factor cost increasing or a tax increase, which leads to a shift in the supply curve, not movement along it. When the supply curve shifts, it is because the suppliers' costs have changed, leading them to supply different amounts at every price, not just a change in the quantity supplied because of the price change alone.