Th1.2: Supply Curve Flashcards
1
Q
What will firms do if prices are higher?
A
increase production to take advantage of the high profits they can make
2
Q
What will higher prices encourage?
A
new firms to enter, as it seems more profitable, so output will increase
3
Q
How would one increase production?
A
by using up more resources which will cost more money
4
Q
What do these three points explain?
A
why the supply curve is upwards sloping
