The correct answer is "quantity supplied increases."
The correct answer is "quantity supplied increases." The law of supply states that, ceteris paribus (all other things being equal), as the price of a good or service increases, the quantity supplied by producers also increases. The law of supply suggests that producers are willing and able to supply more of a good or service at a higher price because they can earn higher profits. To understand this concept, you can think of it in terms of incentives for producers. As the price of a good rises, producers have a greater incentive to allocate more resources and effort into producing and supplying that good in order to take advantage of the higher prices. Therefore, the quantity supplied increases. Conversely, when the price of a good decreases, producers have less incentive to supply the good, which leads to a decrease in the quantity supplied.
