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A 10% increase in the price of a good causes a 10% decrease in quantity supplied. The supply curve is a _______.
  • a)
    straight line passing through the origin
  • b)
    straight line not passing through the origin
  • c)
    straight line parallel to the x-axis
  • d)
    rectangular hyperbola
Correct answer is option 'A'. Can you explain this answer?
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Explanation:

Supply Curve Characteristics:
- A supply curve shows the relationship between the price of a good and the quantity of the good that producers are willing to supply.
- Typically, supply curves have a positive slope, indicating that as the price of a good increases, the quantity supplied also increases.

Effect of a 10% Increase in Price:
- In this scenario, a 10% increase in the price of the good results in a 10% decrease in the quantity supplied.
- This implies that the supply curve is linear and passes through the origin.

Interpretation:
- When the price increases by 10%, producers are willing to supply 10% less of the good, resulting in a straight-line relationship.
- This indicates a proportional response to price changes by suppliers, leading to a supply curve that is a straight line passing through the origin.

Conclusion:
- The supply curve in this situation is a straight line passing through the origin, reflecting the direct relationship between price and quantity supplied.
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A 10% increase in the price of a good causes a 10% decrease in quantity supplied. The supply curve is a _______.a)straight line passing through the originb)straight line not passing through the originc)straight line parallel to the x-axisd)rectangular hyperbolaCorrect answer is option 'A'. Can you explain this answer?
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