Which of the Following Indicates That the Law of Supply

question 298

Multiple Choice

Which of the following indicates that the law of supply applies to makers of soda?

• A) An increase in the price of a soda leads to an increase in the demand for soda.
• B) An increase in the price of a soda leads to an increase in the supply of soda.
• C) An increase in the price of a soda leads to an increase in the quantity of soda supplied.
• D) A decrease in the price of a soda leads to an increase in the quantity of soda demanded.
• E) A decrease in the price of a soda leads to an increase in the supply of soda.

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Definitions:

Natural Monopoly

A market condition where due to high fixed costs or unique resources, a single firm can supply a product or service at a lower cost than any potential competitor, thus dominating the market.

Natural Monopoly

A market situation where a single supplier is most efficient in providing goods or services due to the high fixed or startup costs relative to the size of the market.

Per-unit Cost

The cost associated with producing a single unit of a product, including all variable and fixed costs divided by the total output.

Market Output

The total quantity of goods or services produced and offered for sale by firms in a particular market.