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Which statement best describes the law of supply?
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3. Supply and Demand
The Basics of Supply
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According to the law of supply, price and quantity supplied move in which way?
A
In opposite directions: when price rises, quantity supplied falls (and when price falls, quantity supplied rises).
B
Quantity supplied changes but price remains constant.
C
In the same direction: when price rises, quantity supplied rises (and when price falls, quantity supplied falls).
D
Price changes but quantity supplied remains constant.
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Understand the law of supply: it states that there is a direct relationship between price and quantity supplied.
Recognize that when the price of a good increases, producers are willing to supply more of that good to the market.
Similarly, when the price decreases, producers supply less of the good because it is less profitable.
This means price and quantity supplied move in the same direction — both increase or both decrease together.
Therefore, the correct interpretation is: when price rises, quantity supplied rises; when price falls, quantity supplied falls.
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