Question

Why is profit the major determinant of the amount a producer is willing to supply

Answer 1

• There is always a never ending relationship between the supply and the pricing.
• Every one works to make profit hence if a product has a high price fixed then the producer produces that particular product which is in demand and gain profit.
• In the market if higher prices are quoted for a product the supply of that particular product increases.
• If the market price is low for that particular product then the supply will be limited.
• Hence only the pricing determines whether the goods should be supplied more or less.
• Price of the product determines the goal of the producer of which product he has to supply then.