Question

An increase in the price of a good will ________ supply.

1) increase supply
2) decrease supply
3) increase quantity supplied
4) decrease quantity supplied

Answer 1

An increase in the price of a good will decrease supply.

Step-by-step explanation:

An increase in the price of a good will decrease supply.

When the price of a good increases, it discourages producers from supplying as they would receive higher profits. This leads to a decrease in the quantity of the good that producers are willing to supply.

For example, if the price of gasoline increases, oil companies may reduce the amount of oil they drill, leading to a decrease in the supply of gasoline.