The typical supply curve illustrates that: A) other things equal, the quantity supplied for a good is inversely related to the price of a good. B) other things equal, the supply of the good creates its own demand for the good. C) other things equal, the quantity supplied for a good is positively related to the price of a good. D) price and quantity supplied are unrelated.
The correct answer and explanation is:
Correct Answer: C) other things equal, the quantity supplied for a good is positively related to the price of a good.
The typical supply curve in economics represents the relationship between the price of a good and the quantity of that good producers are willing to supply. This curve generally slopes upward from left to right, showing a positive relationship between price and quantity supplied.
This relationship exists because higher prices provide an incentive for producers to increase output. When the price of a good rises, producers are more likely to find it profitable to allocate more resources toward producing that good. This could involve using more labor, capital, or raw materials to expand production. On the other hand, when prices fall, the profitability of producing the good decreases, which discourages production and causes quantity supplied to drop.
This relationship is described by the law of supply, which states that, all else being equal, the quantity supplied of a good increases as the price increases and decreases as the price decreases. The phrase “all else being equal” is important because other factors—such as changes in technology, input costs, taxes, or the number of sellers—can also influence supply, and these are held constant when analyzing the pure price-quantity relationship.
Option A is incorrect because it describes an inverse relationship, which is characteristic of demand, not supply. Option B misinterprets Say’s Law and does not directly describe the supply curve. Option D is incorrect because price and quantity supplied are indeed related.
Therefore, the correct interpretation of the typical supply curve is that, other things equal, quantity supplied increases when the price increases, making option C the best choice.