Relationship between price and Quantity Supplied

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    Relationship between price and Quantity Supplied

    • Given the producer’s motivation to supply, it should be clear that there is a greater willingness to increase the quantity supplied when there is a rise in prices
    • This is because firms are more likely to be making a greater profit
    • So when price increases, the quantity supplied also increases
    • If there is a fall in price, there will be a fall in the quantity supplied as producers are less likely to make a profit

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