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When some goods or productive factors are completely fixed in amount, regardless of price, the supply curve is
  • a)
    horizontal
  • b)
    downward sloping to the right
  • c)
    vertical
  • d)
    upward sloping to the right
Correct answer is option 'D'. Can you explain this answer?
Verified Answer
When some goods or productive factors are completely fixed in amount, ...
Although demand curves are typically downward sloping to reflect that consumers’ utility for a good diminishes with increased consumption, firm supply curves are generally upward sloping.
The upward-sloping character reflects that firms will be willing to increase production in response to a higher market price because the higher price may make additional production profitable.
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Most Upvoted Answer
When some goods or productive factors are completely fixed in amount, ...
Explanation:

Supply curve represents the relationship between the price of a good or service and the quantity supplied by producers. It shows how the quantity supplied changes in response to changes in price, assuming all other factors remain constant. In this case, the question states that some goods or productive factors are completely fixed in amount, regardless of price.

Fixed factors refer to inputs or resources that cannot be easily changed or increased in the short run, such as land or capital. When these factors are completely fixed, it means that no matter how high or low the price of the good is, the quantity supplied cannot be increased or decreased.

To understand why the supply curve in this case is upward sloping to the right, we need to consider the concept of opportunity cost. Opportunity cost refers to the value of the next best alternative that is forgone when a choice is made.

When the quantity supplied of a good cannot be increased due to fixed factors, the opportunity cost of supplying an additional unit of the good increases as the quantity supplied increases. This is because the fixed factors are already being fully utilized and any additional production requires reallocating resources from other uses or incurring additional costs.

As a result, producers will only be willing to supply more of the good at higher prices, where the increased revenue from selling the additional units outweighs the higher opportunity cost. This relationship between price and quantity supplied forms the upward sloping supply curve.

In summary, when some goods or productive factors are completely fixed in amount, regardless of price, the supply curve is upward sloping to the right because the opportunity cost of supplying additional units of the good increases as the quantity supplied increases. Producers will only be willing to supply more at higher prices to compensate for the higher opportunity cost.
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When some goods or productive factors are completely fixed in amount, regardless of price, the supply curve isa)horizontalb)downward sloping to the rightc)verticald)upward sloping to the rightCorrect answer is option 'D'. Can you explain this answer?
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