Prices influence producers' supply decisions.
There is a direct relationship between the price of a good and the amount of that good that will be supplied.
Example 4
The graph below displays the quantity associated with price in a supply table.
0 is the quantity that will be associated with a price of $1 on a supply table.
The law of supply results from the general tendency for the marginal cost of producing a good or service to increase as the quantity produced increases.
A supply curve is also a minimum-supply-price curve. The greater the quantity produced, the higher the price a firm must be offered to be willing to produce that quantity.
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