According to the law of supply, what happens to quantity supplied as price increases?

The correct answer indicates that as price increases, the quantity supplied also increases. This relationship is grounded in the law of supply, a fundamental principle in economics. The law of supply states that, all else being equal, producers are willing to supply more of a good or service at higher prices. This is primarily because higher prices can lead to higher revenues and profits for businesses, which incentivizes them to produce more.

When prices rise, producers are motivated to allocate more resources toward the production of goods, anticipating that they can sell them for a profit. This is often due to the perception that the market is favorable, and thereby, businesses may increase their investment in production capacity or labor to meet the expected demand.

In summary, an increase in prices leads suppliers to expand their output, thus increasing the quantity supplied, aligning perfectly with the law of supply.