A firm's supply curve is upsloping because:

• A. as the price decreases, firms can produce more at lower costs
• B. as the price increases, demand for the product decreases
• C. as the price increases, firms are willing to supply more due to rising marginal costs
• D. as the price increases, the firm's fixed costs increase

Answer: (C)

Verified step by step guidance

1. Understand that a firm's supply curve shows the relationship between the price of a good and the quantity the firm is willing to supply.
2. Recall that the supply curve is typically upward sloping because higher prices provide an incentive for firms to produce more.
3. Recognize that as output increases, the firm's marginal cost (the cost of producing one more unit) usually rises due to factors like limited resources or inefficiencies.
4. Connect the rising marginal cost to the supply decision: firms will only supply additional units if the price covers these higher marginal costs.
5. Therefore, the correct explanation is that as the price increases, firms are willing to supply more because their marginal costs are rising, making higher prices necessary to justify increased production.