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An increase in supply: (2)

(a) Indicates that more is supplied at higher prices.

(b) Indicates that more is supplied at lower prices.

(c) Indicates that more is supplied at all prices.

(d) The demand curve will become more inelastic.​

User Giles Roberts
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1 Answer

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21 votes

Answer:

A). Indicates that more is supplied at higher prices.

Step-by-step explanation:

As per the law of supply, an increase in supply would signify that 'the firms are willing to sell more goods at a higher price' because they can make more profit now as compared to the supply at a lower price. The supply and price of a normal good have a positive association and therefore, an increase in price stimulates the supply as well. However, there are certain other factors responsible for the increase in supply like a fall in costs of production, an increase in the number of producers in the market, etc yet among the given options, the first one asserts a true claim. Thus, option A is the correct answer.

User Syck
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