Supply curves are usually assumed to slope upward because a

Economics Dec 08, 2020

Supply curves are usually assumed to slope upward because

a. profits fall as prices rise.

b. a higher price leads to increases in demand.

c. a higher price leads to decreases in demand.

d. a higher price attracts resources from other less valued uses.

e. firms drop out of the market as prices rise.

Expert Solution

The correct option is (d). A higher price attracts resources from other less valued uses.

We know that the supply curve usually upwards as a higher price attracts producers to produce more in order to raise their revenues. Henceforth, this higher price attracts producers to switch the productive resources form a less valued product to a higher valued product.

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