Question

Which of the following statements best represents the law of supply?

a) As prices rise, quantity supplied rises
b) As prices rise, quantity supplied falls
c) As prices fall, quantity supplied rises
d) As prices fall, quantity supplied falls

Answer 1

The law of supply indicates that a higher price leads to a higher quantity supplied, so the correct statement is 'a) As prices rise, quantity supplied rises.'

Step-by-step explanation:

The law of supply is a fundamental principle in economics that describes how producers will behave in the marketplace in response to changes in price. It suggests a common relationship between price and quantity supplied: as prices rise, quantity supplied rises; conversely, as prices fall, quantity supplied falls, assuming all other variables are held constant. Therefore, the statement that best represents the law of supply is: 'a) As prices rise, quantity supplied rises.'