Which of the following is an example of the law of supply?

• A. A company reduces production when input costs fall.
• B. A consumer buys more apples when the price decreases.
• C. A farmer increases the quantity of wheat supplied when the market price rises.
• D. A store keeps the quantity of goods supplied constant regardless of price changes.

Answer: (C)

Verified step by step guidance

1. Understand the law of supply: it states that, all else equal, an increase in the price of a good leads to an increase in the quantity supplied, and a decrease in price leads to a decrease in quantity supplied.
2. Analyze each option to see if it reflects this positive relationship between price and quantity supplied.
3. Option 1: 'A company reduces production when input costs fall' relates to input costs affecting supply, not the direct relationship between price and quantity supplied, so it does not illustrate the law of supply.
4. Option 2: 'A consumer buys more apples when the price decreases' describes consumer behavior and the law of demand, not supply.
5. Option 3: 'A farmer increases the quantity of wheat supplied when the market price rises' directly shows that as price rises, quantity supplied increases, which perfectly exemplifies the law of supply.