Which statement best describes the relationship of price and quantity supplied based on the law of supply
A)Firms' production levels are not correlated with the price of a good.
B)The supply curve slopes downward.
C)Firms are willing to produce a greater quantity of a good when the price of the good is higher.
D)As price increases, producers have more market power than consumers.

Question

Quizplus · Accepted Answer

The law of supply states that as the price of a good increases, firms are willing to produce more of the good. This means that the quantity supplied is positively correlated with the price of the good. Option A is incorrect because firms do adjust their production levels based on the price of a good. Option B is incorrect because a downward sloping supply curve applies to the law of demand, not the law of supply. Option D is incorrect because market power does not necessarily relate to the relationship between price and quantity supplied.

Which Statement Best Describes the Relationship of Price and Quantity