📚 Learning Guide
Elasticity in Market Dynamics
easy

If the relationship between price and quantity demanded is similar to the relationship between temperature and the rate of ice melting, what would be the best analogy for the relationship between price and quantity supplied?

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Learning Path
Learning Path

Question & Answer
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Choose the Best Answer

A

Price:Quantity Supplied :: Temperature:Rate of Water Boiling

B

Price:Quantity Supplied :: Temperature:Rate of Ice Freezing

C

Price:Quantity Supplied :: Temperature:Rate of Air Conditioning

D

Price:Quantity Supplied :: Temperature:Rate of Snow Accumulation

Understanding the Answer

Let's break down why this is correct

Answer

The relationship between price and quantity supplied can be compared to the relationship between heat and the rate at which a pot of water boils. Just as increasing the heat makes the water boil faster, raising the price encourages producers to supply more of a product. When prices go up, businesses see the chance to make more profit, so they are willing to produce and sell more. For example, if a bakery can sell bread for a higher price, it will likely bake more loaves to meet that demand. This shows how both higher prices and higher heat lead to increased activity in their respective processes.

Detailed Explanation

When prices go up, suppliers want to make more products. Other options are incorrect because Some might think freezing is similar, but when things freeze, they stop moving; Air conditioning cools things down, which doesn't relate to how prices affect supply.

Key Concepts

Elasticity in Market Dynamics
Supply and Demand Relationships
Market Behavior
Topic

Elasticity in Market Dynamics

Difficulty

easy level question

Cognitive Level

understand

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