When the price of a good falls, the quantity supplied tends to?

When the price of a good falls, the quantity supplied tends to?

• A. Increase
• B. Stay the same
• C. Oscillate
• D. Decrease

Answer: (D)

The main idea here is that price and quantity supplied move together. When the price falls, producers earn less on each unit and become less willing to offer goods for sale. Because the supply curve is upward-sloping, a lower price leads to a smaller quantity supplied. In the short run, some producers may even reduce output or shut down if the price isn’t enough to cover costs, reinforcing the drop in quantity supplied. So, a fall in price naturally leads to a decrease in the quantity supplied.

The main idea here is that price and quantity supplied move together. When the price falls, producers earn less on each unit and become less willing to offer goods for sale. Because the supply curve is upward-sloping, a lower price leads to a smaller quantity supplied. In the short run, some producers may even reduce output or shut down if the price isn’t enough to cover costs, reinforcing the drop in quantity supplied. So, a fall in price naturally leads to a decrease in the quantity supplied.