--%>

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 : Guardian implies that there really is

    Evaluate and explain the statements: “Market is its own guardian implies that there really is an invisible hand or taskmaster that watches over the decision makers in the marketplace”

  • Q : Adopting policy of paying efficiency

    The expected losses to workers by shirking are increased while a firm adopts a policy of: (1) dividing productive tasks therefore the division of labor is optimal. (2) paying efficiency wages that exceed market-clearing wages. (3) avoiding legal liability from not wri

  • Q : Comparative Advantage-Mutual exchange

    Mutually beneficial exchange is probable whenever relative production costs vary previous to trade, is a manner to state the law of: (1) Positive profits from trade. (2) Comparative benefit. (3) Specialization and Division. (4) Purchasing power parity

  • Q : Enterprise is dictated primarily by

    “The legal form an enterprise assumes is dictated primarily by the financial requirements of its particular line of production.”  Do you agree?

  • Q : Illustrate major economic flows that

    Illustrate major economic flows that link U.S. with nations.  Provide an example to illustrate each flow.  Explain the relationship between the top and bottom flows.

  • Q : Resource payments correspond to

    Explain the foundation of economics where society’s material wants are Resource payments correspond to resource categories?

  • Q : Way to determine nature price of Adam

    “Natural price” by Adam Smith of a good was eventually determined through: (1) the amount of capital used within production in the short run. (2) long-run average costs of production, that Adam Smith believed to be the amo

  • Q : Market system automatically adjustment

    Concept of Adam Smith that the market system automatically adjusts as when guided through an “invisible hand” most intimately resembles: (1) flows of electricity across the microcircuits within computer chips. (2) homeosta

  • Q : Slope of a straight line is the ratio

    Explain the slope of a straight line is the ratio of the vertical change to horizontal change between any two points on the line?

  • Q : Definition of Full Employment

    Definition of “Full Employment”?