Regarding the law of supply, which of the following statements is correct?
A) As the price of a good or service rises, the quantity supplied will increase.
B) As the price of a good or service rises, the quantity supplied will decrease.
C) The ceteris paribus assumption does not apply.
D) As demand falls, supply rises.

Question

Quizplus · Accepted Answer

The law of supply states that as the price of a good or service rises, the quantity supplied will increase, ceteris paribus (assuming all other factors remain constant). This is because as the price rises, producers are incentivized to supply more of the good or service in order to earn more revenue. Conversely, as the price falls, the quantity supplied will decrease, as producers have less incentive to produce the good or service at lower prices.

Regarding the Law of Supply, Which of the Following Statements