Give two reasons for the positive slope of the supply curve.

1.	Give two reasons for the positive slope of the supply curve.
Answer» The two reasons for the positive slope of the supply curve are as follows: 1. Profit motive of Individual firm—Levels of price determine the amount of profits. Higher is the price of the commodity, the greater is the incentive for the producer to produce and supply in the market, other things remaining the same. 2. Rise in marginal cost of production—Marginal cost of production increases with an increase in the amount of production. This implies that the producer would be prepared to produce and supply a larger quantity of a commodity only at a higher price, so as to cover higher cost of production.

Answer»

The two reasons for the positive slope of the supply curve are as follows:

1. Profit motive of Individual firm—Levels of price determine the amount of profits. Higher is the price of the commodity, the greater is the incentive for the producer to produce and supply in the market, other things remaining the same.

2. Rise in marginal cost of production—Marginal cost of production increases with an increase in the amount of production. This implies that the producer would be prepared to produce and supply a larger quantity of a commodity only at a higher price, so as to cover higher cost of production.

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