If the price of a good is low, a

Economics Dec 18, 2020

If the price of a good is low,

a. firms would increase profit by increasing output.

b. the supply curve for the good will shift to the left.

c. the quantity supplied of the good could be zero.

d. firms can and should raise the price of the product.

Expert Solution

If the price of a good is low,

a. firms would increase profit by increasing output.

From the law of demand, we know that the demand increases as the price of a product fall. Therefore, if the price of a commodity is low, the demand will be high. To meet the high demand and generate profits, the producers should increase the output.

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