The law of supply says that when the price of oil rises, the supply of automobiles falls.

Question

Quizplus · Accepted Answer

The law of supply states that as the price of a good or service increases, the quantity supplied increases. It does not state that the supply of automobiles will fall when the price of oil rises, as there is no direct relationship between the two. The law of supply states that as the price of a good or service increases, the quantity supplied increases, all other factors being equal. Therefore, the supply of automobiles should not fall when the price of oil rises, unless there are other factors affecting the supply of automobiles.

The Law of Supply Says That When the Price of Oil