A Positive Relationship Between Price and Quantity Supplied Implies That

question 22

Multiple Choice

A positive relationship between price and quantity supplied implies that as price:

• A) goes up, quantity supplied falls.
• B) goes up, quantity supplied rises.
• C) falls, supply falls.
• D) goes up, supply goes up.

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Definitions:

Perfectly Competitive

A market structure characterized by many sellers, homogeneous products, and free entry and exit, leading to price determination by supply and demand.

Long-Run Industry Supply Curve

The long-run industry supply curve shows how the quantity supplied by an industry varies with price once all adjustment has been made, including the entry and exit of firms.

Increasing-Cost Industry

An industry in which production costs rise as firms enter the market, often leading to higher prices for consumers.

Positive Profits

Financial gains achieved when the total revenues exceed the total costs of a business.