What will be the effect on supply when the price of a product rises?

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BlackTom AI · Accepted Answer

Examining the question about the effect on supply when the price of a product rises requires distinguishing between movements along a supply curve (price-induced changes in quantity supplied) and shifts of the entire supply curve (changes in supply itself).
Option a: 'Supply will increase (the supply curve will shift right)'. This statement describes a shift of the entire supply curve to the right, which would occur if factors other than price (like lower input costs, improved technology, or favorable regulation) made producers willing to supply more at every price. A pure rise in price does not shift the curve; it moves along the same supply curve. So this option is incorrect for the stated scenario.
Option b: 'Supply will decrease (the supply curve will shift left)'. A leftward shift in the supply curve would indicate a decrease in supply due to non-price factors (higher input costs, etc.). Again, a price increase alone does not cause a shift in the curve in the opposite direction; thus this option misinterprets the effect of a price rise and is incorrect.
Option c: 'Quantity supplied will increase (there will be an expansion in supply)'. This option captures the fundamental concept that, as the price rises, producers are willing to offer more of the good for sale, leading to an increase in quantity supplied along the same supply curve. Economically, this is known as an expansion in supply or movement along the curve, not a shift of the curve. This aligns with the law of supply and is the correct interpretation for a price increase.
Option d: 'Supply will decrease (the supply curve will shift left)'. As noted with option b, a price change does not cause a non-price-factor-induced shift in supply in this direction. A higher price does not make producers want to supply less at every price point, so this statement is incorrect.
In summary, the correct interpretation is that a rise in price leads to a higher quantity supplied along the existing supply curve (an expansion), while non-price determinants would cause the entire curve to shift. The incorrect options misattribute the effect to shifts caused by price changes rather than movements along the curve.

MUF0061 Economics Unit 1 - Semester 2, 2025 Supply - Video and Quiz

What will be the effect on supply when the price of a product rises?

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