Final answer:
The Law of Supply indicates that higher prices lead to a higher quantity supplied by producers, as they are motivated by the potential for greater profits.
Step-by-step explanation:
The Law of Supply states that when prices are relatively high, supply is relatively high. This is because producers are more willing to supply more products at higher prices to increase profits. According to this economic principle, there is a direct relationship between the price of a good and the quantity supplied.
When the price of a good increases, producers can earn more money for each unit they sell, which incentivises an increase in production. Similarly, if the price decreases, possible profits are reduced, making it less attractive for businesses to produce large quantities. Understanding the Law of Supply is crucial in economics as it helps explain producer behavior in a market economy. The correlation between high prices and high supply can be seen in various markets and products, driving the decisions of businesses and impacting the overall economy.