Quantity supplied increases when the price of a good increases because
A)producers find it more profitable to make the item.
B)potential buyers "drop out" of the market, so the good becomes more abundant.
C)as demand decreases with a high price, surpluses appear.
D)All of these responses are correct.

Question

Quizplus · Accepted Answer

When the price of a good increases, producers find it more profitable to produce the item, which leads to an increase in the quantity supplied. This is because they can earn higher profits from selling the good at a higher price. Therefore, choice A is the best answer. Choice B is incorrect because potential buyers dropping out of the market would lead to a decrease in demand and a decrease in the quantity supplied. Choice C is also incorrect because a decrease in demand with a high price would lead to a surplus, not an increase in quantity supplied.

Quantity Supplied Increases When the Price of a Good Increases