Question

The Law of Supply states that, other things remaining constant:

• A. The lower the price, the larger the quantity supplied
• B. The higher the price, the larger the quantity supplied
• C. The higher the price, the smaller the quantity supplied
• D. There is no change in supply with change in price

Hint:

The supply curve is upward-sloping from left to right, which visually represents this positive relationship between price and quantity supplied.

Answer 1

The Correct Option is B

Step 1: Understanding the Concept:
The Law of Supply is a fundamental principle of economics that describes the relationship between the price of a good and the quantity producers are willing to supply.

Step 2: Detailed Explanation:
Under the "ceteris paribus" assumption (all other factors remaining constant), there is a direct, positive relationship between price and quantity supplied.
When the market price of a product increases, the potential profit from selling that product also rises.
This encourages existing producers to increase output and attracts new producers to enter the market, leading to a larger quantity supplied.

Step 3: Final Answer:
Hence, the Law of Supply states that a higher price leads to a larger quantity supplied.