Registered Environmental Manager (REM) Practice Exam

What is described by the supply curve?

1. The relationship between consumer demand and pricing

2. The correlation between product cost and available quantity

3. The relationship between product price and quantity supplied

4. The balance of production costs and selling prices

The correct answer is: The relationship between product price and quantity supplied

The supply curve illustrates the relationship between product price and the quantity of that product that producers are willing to supply to the market at those prices. As the price of a good increases, producers are generally willing to supply more of it, reflecting a direct correlation between price and quantity supplied. This relationship is fundamental in understanding how markets operate, as it helps to illustrate concepts such as market equilibrium and the effects of price changes on supply. While the other choices involve important aspects of economics, they do not specifically describe the characteristics of a supply curve. The first choice focuses on consumer demand, which pertains to the demand curve rather than the supply curve. The second choice discusses product cost and available quantity, which are more associated with production theories. The last choice mentions the balance of production costs and selling prices, which can influence supply but does not specifically define the supply curve itself. Thus, the choice that accurately captures the essence of the supply curve is the one relating to the relationship between product price and quantity supplied.