Which statement best explains the law of supply? A. The quantity supplied by producers increases as prices rise and decreases as prices fall.
B. The quantity supplied by producers decreases as prices rise and increases as prices fall.
C. The quantity supplied by consumers increases as prices rise and decreases as prices fall.
D. The quantity supplied by consumers decreases as prices rise and increases as prices fall.
The correct answer is:
A. The quantity supplied by producers increases as prices rise and decreases as prices fall.
Explanation: The law of supply states that there is a direct relationship between the price of a good or service and the quantity that producers are willing to supply. When prices increase, producers are incentivized to supply more of the good to maximize their profits. Conversely, when prices decrease, the incentive to produce less increases, leading to a decrease in the quantity supplied. This principle reflects how producers respond to changing market conditions.
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