Chapter 2R, Problem 1CTQ

To determine

The question requires us to determine the impact of an increase in price on supply.

Explanation of Solution

An increase in the price of the vehicle will encourage the producers to produce more vehicles to raise their profitability in the market. So, producers will produce more by hiring new workers and machinery and focus on expanding their businesses.

A higher price will also lure new suppliers into the market for vehicles and causes the overall supply to rise in the market.