Which of the following reasons explains the upward sloping of supply curve in a competitive market?

A. Ceteris paribus, marginal cost increase as output increases
B. As new firms enter the market, factor price moves up
C. Firms are in business to satisfy consumers
D. Marginal cost often increases in a competitive market
E. Firms are in business to produce goods

Correct Answer:

Option A – Ceteris paribus, marginal cost increase as output increases