Question

This graph demonstrates how

the amount produced slightly changes with the price.
the amount produced greatly changes with the price.
the amount consumed slightly changes with the price.
the amount consumed greatly changes with the price

Answer 1

The correct answer is: "the amount produced greatly changes with the price."

The supply curve informs about the amount of a certain product that companies are willing to offer in the markets, at the different price levels. The curve has a positive slope because the two variables have a direct relationship: the larger the price, the larger the amount that companies will supply.

Therefore, it will be always related to the quantity produced and not to the quantity consumed, which is connected to the demand schedule instead.

Let's first compute the size of each variation, before reaching a conclusion:

• Variation in prices: (25-20)/20= 0.25
• Variation in the quantity supplied: (8-3)/3=  1.6666

While prices have experienced a rise of the 25%, the amount supplied has increased in the 166,66%. As the variation in the quantity supplied is much larger than the one in prices, the answer is that the amount produced changes greatly with the price.

Answer 2

The graph demonstrates how the amount produced greatly changes with the price.

This graph shows the supply of cars. On the Y axis we have the price while on the X axis we have the quantity that was supplied by the producers.

At the change in price from 20 to 25, we can see that many more cars were supplied or produced.

The change in supply moved from 3 quantities to 8 as the price changed from 20 thousand dollars to 25 thousand dollars.

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