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 ________.

Question

Quizplus · Accepted Answer

The law of supply is based on the assumption that firms aim to maximize their profits. As prices increase, firms are willing to produce and sell more of a good or service because the higher prices yield higher profits. Conversely, as prices decrease, firms may reduce their output or exit the market altogether because the lower prices lead to lower profits or even losses. Therefore, the relationship between price and the quantity supplied is positive or direct. The other choices are incorrect because supply depends on factors such as resource availability, competition, and technology, and may be influenced by the prices and availability of substitutes or complements.

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