Answer to Question #240902 in Microeconomics for sophia

Question

According to the equation Q​ = 16 ​+ 0.2P​, where Q is the quantity supplied and P is the price of the good measured in​ dollars, the

A.

quantity supplied equals 20 percent of the price.

B.

quantity supplied rises by 16 units as the price increases by​ $1.

C.

quantity supplied rises by 0.2 units as the price increases by​ $1.

D.

quantity supplied rises by 3.2 units as the price increases by​ $1.

E.

slope of the supply curve equals 16.

Answer 1

Solution:

The correct answer is B. quantity supplied rises by 16 units as the price increases by​ $1.

This means that the quantity supplied increases as the market price increases. Therefore, for every $1 increase, the quantity supplied will increase by 16 units.