Which of the following statements is true about supply in a competitive market, holding all other factors constant?

• A. An increase in the price of a good generally increases the quantity supplied of that good.
• B. A change in the price of a good causes the supply curve to shift left or right.
• C. An increase in the price of a good generally decreases the quantity supplied of that good.
• D. Supply is the same as quantity supplied; they change in exactly the same way when nonprice determinants change.

Answer: (A)

Verified step by step guidance

1. Understand the difference between 'quantity supplied' and 'supply'. Quantity supplied refers to the amount of a good that producers are willing and able to sell at a specific price, while supply refers to the entire relationship between price and quantity supplied, represented by the supply curve.
2. Recognize that a change in the price of the good itself causes a movement along the supply curve, which is a change in quantity supplied, not a shift of the supply curve.
3. Recall the law of supply, which states that, holding all else constant, an increase in the price of a good leads to an increase in the quantity supplied of that good, and a decrease in price leads to a decrease in quantity supplied.
4. Understand that a change in nonprice determinants of supply (such as input prices, technology, or number of sellers) causes the entire supply curve to shift left or right, representing a change in supply, not just quantity supplied.
5. Evaluate each statement in the problem by applying these concepts: the true statement is the one that correctly describes the relationship between price and quantity supplied, which is that an increase in price generally increases the quantity supplied.