Question

The relationship between quantity supplied and the price of output is such that Group of answer choices quantity will decrease as the number of firms increases. an increase in quantity will automatically lead to a reduction in price. an increase in price will produce an inward shift in the supply curve. an increase in price will lead to an increase in quantity supplied.

Answer 1

Answer:

An increase in quantity will automatically lead to a reduction in price.

An increase in price will lead to an increase in quantity supplied.

Explanation:

Option “2” and “4” are correct because the increase in quantity supplied shifts the supply curve rightwards and resulting in the price falls. While the positive relationship between price and the quantity supplied leads to an increase in supply when price increases. When price increases then the producer finds more profitable to supply more quantity. Thus, in order to curb more profit, the producer supplies more quantity when price increases.