What is stated by the law of supply?
(1 point)
Responses
An increase in price will cause a reduced amount of sales.
An increase in price will cause a reduced amount of sales.
An increase in quantity sold will allow a decrease in price.
An increase in quantity sold will allow a decrease in price.
An increase in quantity produced will decrease consumer demand.
An increase in quantity produced will decrease consumer demand.
An increase in price will inspire an increase in units supplied.
An increase in price will inspire an increase in units supplied.
The correct statement according to the law of supply is: An increase in price will inspire an increase in units supplied.
The correct statement stated by the law of supply is: "An increase in price will inspire an increase in units supplied."
Explanation:
The law of supply is an economic principle that describes the relationship between the price of a good or service and the quantity supplied by producers. The law of supply states that as the price of a product increases, the quantity supplied by producers also increases, assuming all other factors remain constant.
To understand this concept, we can think about it from the perspective of producers. When the price of a product increases, producers are motivated to supply more of it because they can earn higher profits. Higher prices mean that producers have the potential to generate more revenue from selling their products, which creates an incentive for them to increase production.
Conversely, if the price of a product decreases, producers are likely to reduce the quantity supplied because it may not be as profitable to produce and sell at lower prices. Therefore, the law of supply suggests that there is a positive relationship between price and quantity supplied.
In summary, the law of supply states that when the price of a product increases, producers will be inspired to increase the quantity supplied to take advantage of the higher prices.