Which statement best describes the relationship between price and quantity supplied on the supply curve?

• A. As price decreases, quantity supplied remains unchanged.
• B. There is no relationship between price and quantity supplied.
• C. As price increases, quantity supplied decreases.
• D. As price increases, quantity supplied increases.

Answer: (D)

Verified step by step guidance

1. Understand the law of supply, which states that there is a direct relationship between price and quantity supplied, meaning that as price increases, producers are willing to supply more of the good.
2. Recognize that the supply curve graphically represents this relationship, typically sloping upward from left to right, indicating that higher prices incentivize higher quantities supplied.
3. Analyze each statement by comparing it to the law of supply: if price decreases, quantity supplied usually decreases (not remains unchanged), so the first statement is incorrect.
4. Note that the statement 'there is no relationship between price and quantity supplied' contradicts the fundamental principle of supply, so it is incorrect.
5. Confirm that the correct description is 'As price increases, quantity supplied increases,' which aligns with the positive slope of the supply curve and the law of supply.