ECON HELP! The Law of Supply: other things remaining the same, the higher the price of a good, the greater is?

Question

the quantity supplied.

This seems backwards to me, please help me understand this concept, examples would be nice. I just keep thinking about how expensive Ferrari's are and how they don't make a ton of them, it seems like they would mak eless because the quantity demand would be less.

HELP!

and Thank you!

Answer 1

The higher the price, the greater the quantity supplied.

You're focusing on Ferraris from the wrong end of the telescope. Imagine if the price were only $100 each. How many would they make? The current supply is as high as it is because they can get a good price for them. If the price were to double, I can assure you they'd go into overtime and produce more.

Of course, as the price goes up, Demand does go down. After all, who but the government wants to buy a hammer for $400?

What you have to understand is that there is a point where the Demand and the Supply intersect. If you raise prices above that point, called Equilibrium, suppliers will tend to want to supply more, but fewer buyers will demand them. If you drop the price from Equilibrium, you get a shortage as more people want them than suppliers will provide.

Answer 2

i think it's supposed to be higher the deamand, the greater the quantity supplied. the example of a ferrari might be a bad one, because that's an elastic good. things like food, water, and gasoline are inelastic goods, which means that even if the price goes up, demand doesn't decrease.