Chapter 7, Problem 16AA

To determine

To evaluate: Whether suppliers tend to produce more or less of an item; when the price of an item goes up.

Explanation of Solution

The main motive of every producer is to earn profit from his production. It is always profitable for the producer or supplier to increase its supply when the price of those particular goods go up. The quantity given increases in response to price increases because existing producers would find it profitable to produce more at a higher price than at a lower price.

Economics Concept Introduction

Introduction:   A change in a commodity’s price influences its demand. The demand curve is determined by both the effect of sales and the effect of substitution. The results differ depending on the type of product and the consumer's taste and preferences.