What does an increase in supply at higher prices suggest about producers?

An increase in supply at higher prices indicates that producers are incentivized by the prospect of higher potential profits. When prices rise, it generally signals to producers that there is more demand for their goods. As a result, firms are motivated to increase their output to capitalize on the higher prices and maximize their profit potential. This behavior aligns with the law of supply, which suggests that suppliers are willing to offer more goods for sale at higher prices because they can cover higher production costs while still making a profit.

In this context, the other options do not accurately reflect the behavior suggested by an increase in supply due to higher prices. Reducing production costs might occur for reasons unrelated to pricing and does not inherently explain why supply would increase. Facing increased competition could lead to various responses, including improving efficiency or reducing prices, rather than an increase in supply solely in response to price rises. Lastly, decreasing investment in capital typically points to a decrease in future supply capability, not an increase in current supply. Thus, the motivation of producers to increase supply due to higher price levels is best captured by the potential for increased profits.