BUSINESS ADMINISTRATION
BUSINESS ECONOMICS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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as price increases, supply increases
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as prices decrease, supply increases
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price increases, quantity demanded decreases
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as price decreases, quantity demanded decreases
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Detailed explanation-1: -What Is the Law of Supply? The law of supply is the microeconomic law that states that, all other factors being equal, as the price of a good or service increases, the quantity of goods or services that suppliers offer will increase, and vice versa.
Detailed explanation-2: -The law of supply states that there is a direct relationship between price and quantity supplied. In other words, when the price increases the quantity supplied also increases.
Detailed explanation-3: -With a rise in price, the tendency is to increase supply because there is now more profit to be earned. On the other hand, when prices fall, producers tend to decrease production due to the reduced economic opportunity for profit.
Detailed explanation-4: -The law of supply Law of supply states: As price of a good increases, the quantity supplied of the good rises, and as the price of a good decreases, the quantity supplied of the good falls, ceteris paribus. Restated: there is a direct relationship between price (P) and quantity supplied (Qs).