The relationship between quantity supplied and the price of output is such that

Question

Quizplus · Accepted Answer

According to the law of supply, as the price of output increases, the quantity supplied by producers increases because they are willing to produce and sell more at higher prices to earn more profit. Therefore, option A is correct. Option B is incorrect because the number of firms does not necessarily affect the relationship between price and quantity supplied. Option C is incorrect because an increase in price will lead to an outward shift in the supply curve, indicating an increase in quantity supplied. Option D is incorrect as an increase in quantity supplied may or may not lead to a reduction in price, it depends on the market conditions and competitiveness among producers.

The Relationship Between Quantity Supplied and the Price of Output