For a business to be willing to increase its quantity supplied, rising prices are necessary to cover higher marginal opportunity costs of production.

Question

Quizplus · Accepted Answer

As the quantity supplied increases, the production costs increase as well, and thus the marginal opportunity costs of production also increase. In order for the business to cover these higher costs and maintain profitability, they may need to raise their prices. This is why rising prices can incentivize businesses to increase their quantity supplied.

For a Business to Be Willing to Increase Its Quantity