Chapter 7.3, Problem 3R

To determine

To evaluate: The effect on supply with greater incentives of profits.

Explanation of Solution

Law of supply says that other variables that remain constant, the price and quantity of a good are directly related to one another. In other terms, when consumers pay a price for good increases, manufacturers then raise the availability of that good in the market.

Law of supply describes the actions of the manufacturer at the time of shifts in products and services prices. As the price of a good rises, the producer raises the production because of higher demand and in order to make a profit.So according to the supply law, the greater the price of a good, the greater will be the motivation for the supplier to produce more goods.

Economics Concept Introduction

Introduction: Supply is a basic economic term which represents the total amount accessible to consumers for a particular product or service. Supply may be related to quantity availability at a given price, or quantity available over a variety of prices.