--%>

Why does the supply curve slope upward

Explain the law of supply. Why does the supply curve slope upward?

E

Expert

Verified

As prices rise because of increased demand for a commodity, producers find it more and more profitable to increase the quantity they offer for sale whereas supply curve will slope upward from left to right.  Clearly, firms would rather sell at a higher price than at a lower price.  Furthermore, it is essential for firms to demand a higher price as they increase production.  This comes about because as they produce more, they initiate to run up against capacity constraints and costs rise. As manufacturing increases firm will need to add an extra shift and then a third shift, mutually conceivably at higher wages.  It may run out of warehouse space and have to rent at higher cost from another firm.

   Related Questions in Business Economics

  • Q : Strategic behaviour of decisionmaker If

    If one decisionmaker in interdependent circumstances calibrates its decisions to the anticipated reactions of the other party, in that case the decisionmaker is engaged within: (1) psychological forecasting. (2) profit maximization. (3) collusion. (4) strategic behavi

  • Q : Freedom is to some extent illusory

    Illustrate “freedom is to some extent illusory”?

  • Q : Question 7 Question 7: You are given

    Question 7: You are given the following data about two firms: FIRM A Quantity 0 1 2 3 4 5 6 Total revenue ($) 0 10 20 30 40 50 60 Average revenue ($) ___ ___ ___ ___ ___ ___ ___ Marginal revenue ($) ___ ___ ___ ___ ___ ___ Total cost ($) 30 42 50 60 76 100 14

  • Q : Why is the problem of unemployment a

    Why is the problem of unemployment a part of the subject matter of economics?

  • Q : Illustrate the 3rd the government

    Illustrate the 3rd the government redistributes income?

  • Q : Define explicit cost and implicit cost

    Briefly describe the term explicit cost and implicit cost?

  • Q : Problem on utility function Matt’s life

    Matt’s life is divided into two time periods, young and old, and his utility is a function of two “goods”:  consumption when young and consumption whenever old.  Consumption when young and consumption when old are both of normal goods to Ma

  • Q : Supply and demand at tax burdens and

    The new supply and demand curves within University City are S0 and D0. But after the county commission imposed at $3 per six-pack excise tax upon beer: (w) beer sellers' revenue after taxes decreases by $60,000 monthly. (x) buyers and sellers eac

  • Q : Main economic functions of government

    Enumerate and briefly discuss the main economic functions of government.  Which of these functions do you think is the most controversial?  Why?

  • Q : Consumer and producer surplus in the

    In perfectly competitive market, the market demand and market supply curves are provided by Qd = 1000 −10Pd and Qd = 30Ps. Assume that the government gives a subsidy of $20 per unit to each and every seller in the mark