Question 1
Theory of SupplyA producer will supply more of a good if
- A.average cost of production is increasing
- B.there is an increase in the demand for the good
- C.there is an increase in its excise duty
- D.more competitive firms enter the market for the good
Show the answer and explanation
Answer: B (there is an increase in the demand for the good)
Explanation
Higher demand raises the price, so the producer offers more.