According to the law of supply, the amount of a good or service supplied will increase as the price increases, and decrease as the price decreases. This direct relationship exists because ________.

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The law of supply is based on the assumption that producers seek to maximize their profits, therefore as the price of a good or service increases, producers are willing to supply more since they will earn more profit per unit. Conversely, as the price of a good or service decreases, producers will supply less since the profit per unit is lower.

According to the Law of Supply, the Amount of a Good