Question

Read the passage and then answer the question:
A business has been researching sales data on its latest product. The data
show that demand for the product is so high that the company can raise its
price without losing customers. The business decides to raise the price and
greatly increases its total supply of the product to keep up with the demand.
The situation described in the passage most reflects the impact of which
concept?
A. The law of supply
B. The income effect
C. The law of demand
D. The substitution effect

Answer 1

Answer:

A. Law of Supply

Explanation: I got it right on a of the pex

Answer 2

The Law of Supply states that with increase in price of a product, the quantity supplied should also increase. There is a direct relationship.

What does the passage talk about?

The passage says that in order to increase profits for the business, the prices of the goods have been increased.

According to the data, the demand remains unchanged. And hence, the supply increases.

Therefore, the situation described in the passage is (a)The law of supply

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