I need advice on whether on my supply logic is correct.

Question 1: Any point on the supply curve indicates the minimum price that a producer must receive in order to supply a specific quantity of output. True or false?

I think, it is true because, if the price increases the quantity supplied would be differ. Thus, it is indeed the minimum price.

Question2: An increase in price results in an increase in supply but not an increase in the quantity supplied.

I think, it is false because price causes a movement along the supply curve. However, if the price of complementary good-in-production increase, the supply will increase, but this will also lead to an increase in quantity supplied, unless the demand decreases due to other factors.


1 Answer 1


Question 1 That's a reasonable way to think about it,but maybe missing out on a bit of nuance. Realize that at any given price, the supply curve indicates how much WILL be supplied. You are correct that if the price drops, the supplier will no longer be willing to supply that quantity of a good. But likewise, if price increase, the supply will seek to supply a greater quantity.

Question 2 Yes, this is false. A change in price results in a movement along the supply curve and so increases/decreases the quantity supplied. Supply itself is changed, meaning a shift of the whole supply curve, when faced with a shock, such a technological change.


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