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

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BlackTom AI · Accepted Answer

Restating the scenario: the question asks about the effect on supply when the price of a product rises.
Option (a): 'Quantity supplied will increase (there will be an expansion in supply)'. This aligns with the law of supply, which states that, holding other factors constant, as the price rises, producers are willing to offer more of the good for sale, leading to an expansion along the supply curve and a higher quantity supplied.
Why this makes sense: a higher price improves potential profits for each unit sold, providing an incentive for firms to produce more output or bring more of the good to market. This is a movement along the supply curve, not a shift of the curve, since price change alters quantity supplied directly.
Why other options would be incorrect (if there were alternatives): In a typical list, you might expect options such as 'quantity supplied decreases' (which would contradict the economic intuition of supply) or 'the supply curve shifts left' (which would imply a change in supply due to non-price determinants, not a pure price rise). However, since only option (a) is presented here, the analysis focuses on whether this option coherently describes the price–quantity supplied relationship. The statement correctly captures the positive relationship between price and quantity supplied.
In summary, with a price increase, producers tend to increase the quantity they are willing to supply, reflecting the normal upward-sloping relationship in the supply schedule.

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

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