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Which statements are true according to the law of supply?

1.)A decrease in demand leads to an increase in supply.
2.)A decrease in demand leads to a decrease in supply.
3.)An increase in price leads to a decrease in supply.
4.)A decrease in price leads to a decrease in supply.
5.)An increase in price leads to an increase in supply.

1 Answer

2 votes
I believe the answer is:
-A decrease in price leads to a decrease in supply.
-An increase in price leads to an increase in supply.

As the price of a product fall down, the amount of profit that the sellers would get for selling the product would also fall. This would cause them to decrease the amount of supply so they can produce more profitable happen. The exact opposite happen when the price of the product rises.
User The Rationalist
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