Which of the following helps explain why the law of supply exists?
A) Larger outputs result in lower costs of production.
B) The law of increasing opportunity cost
C) The costs of production remain constant throughout all levels of output.
D) Sellers realize that if the price increases, they make larger profits and do not need to change their production.
E) The law of demand

Question

Quizplus · Accepted Answer

The law of increasing opportunity cost explains why the law of supply exists because as producers increase the quantity of a good they supply, they often face higher marginal costs. This concept suggests that in order to produce more of one good, a producer must forego the opportunity to produce something else, leading to an increase in costs for additional units of output. This incentivizes producers to supply more of a good only if the price increases, which is a fundamental principle of the law of supply.

Which of the Following Helps Explain Why the Law of Supply