Which of the following explains why the supply curve is upward sloping?

• A. As the price of a good increases, producers are willing to supply more because higher prices cover higher marginal costs.
• B. Lower prices encourage producers to supply more due to increased efficiency.
• C. Producers always supply the same quantity regardless of price.
• D. As the price of a good increases, consumers demand more, leading to higher supply.

Answer: (A)

Verified step by step guidance

1. Understand that the supply curve shows the relationship between the price of a good and the quantity producers are willing to supply.
2. Recall the law of supply: as the price of a good increases, producers are generally willing to supply more of it.
3. Recognize that producing additional units often involves higher marginal costs, so higher prices are needed to cover these costs and incentivize increased production.
4. Eliminate incorrect options by noting that lower prices do not encourage more supply, producers do not supply the same quantity regardless of price, and consumer demand changes do not directly explain the supply curve's slope.
5. Conclude that the upward slope of the supply curve is explained by the fact that higher prices enable producers to cover higher marginal costs, motivating them to supply more.