Which of the following statements is TRUE?
I. As more sellers enter a market, the supply of the product will increase.
II. If input prices increase, the supply of the product will be unaffected because firms pass the higher costs of production to consumers in the form of higher prices.
III. Firms respond to higher prices for their product by offering a larger quantity for sale.
A) I and II
B) II and III
C) I, II, and III
D) I and III

Question

Quizplus · Accepted Answer

I. True, as more sellers enter a market, they add to the total quantity of the product available for sale, thus increasing supply. III. True, when prices increase, firms are incentivized to produce and sell more because they can earn more revenue, leading to a larger quantity offered for sale. II. False, if input prices increase, the cost of production goes up, which can affect the supply curve by shifting it to the left, indicating a decrease in supply at every price level, rather than being unaffected.

Which of the Following Statements Is TRUE