According to the text, firms encounter rising costs when they attempt to produce more in the same time period. As a consequence, they must be offered a higher price to be willing to incur these higher costs. The resulting relationship between price and quantity supplied is
Part 2
A.
direct (or positive) and is called the law of supply.
B.
direct (or positive) and is called the law of demand.
C.
inverse (or negative) and is called the law of supply.
D.
direct (or positive) and is called the law of human nature.
A. direct (or positive) and is called the law of supply.
The correct answer is A. direct (or positive) and is called the law of supply.
The correct answer is A. direct (or positive) and is called the law of supply.
To understand why this is the case, we need to delve into the concept of the law of supply. According to the law of supply, there is a direct relationship between the price of a good or service and the quantity supplied. When the price of a good or service increases, suppliers are willing to produce and offer more of that good or service. Conversely, when the price decreases, suppliers are less willing to produce and offer that good or service.
In the given text, it mentions that firms encounter rising costs when they attempt to produce more in the same time period. This means that as firms increase their production, they incur additional costs such as hiring more workers, purchasing additional raw materials, or investing in new equipment. In order to cover these increased costs, firms would require a higher price for their goods or services.
Therefore, due to the rising costs associated with increased production, firms would only be willing to produce and supply more if they are offered a higher price. This creates a direct (or positive) relationship between the price and quantity supplied, thereby confirming that the correct answer is A. direct (or positive) and is called the law of supply.