If the price of a good is low,
a. firms would increase profit by increasing output.
b. the supply curve for the good will shift to the left.
c. the quantity supplied of the good could be zero.
d. firms can and should raise the price of the product.
A
The correct answer is a. firms would increase profit by increasing output.
To understand why, let's break down each option and eliminate the incorrect ones:
a. Firms would increase profit by increasing output: This is a logical response. When the price of a good is low, firms can increase their profit by producing and selling more of the good. By increasing output, firms can take advantage of the low price to attract more customers and generate higher sales.
b. The supply curve for the good will shift to the left: This is not the correct answer. The supply curve represents the relationship between the price of a good and the quantity that sellers are willing to sell. When the price of a good is low, it does not trigger a shift in the supply curve. Instead, it may lead to changes in the quantity supplied along the existing supply curve.
c. The quantity supplied of the good could be zero: This is unlikely to happen when prices are low. As long as there is some positive price, there will be firms willing to supply a certain quantity of the good. However, when the price becomes extremely low, it may reach a point where firms stop producing the good because it is no longer profitable.
d. Firms can and should raise the price of the product: This is not the correct answer. Raising the price of the product when it is already low could further reduce demand. By doing so, firms could risk selling even less and potentially reducing their profit. Instead, firms should seek to increase their profit by increasing output and attracting more customers.
So, the correct answer is a. firms would increase profit by increasing output.