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

Disable ads (and more) with a membership for a one time $4.99 payment

Study for the University of Central Florida ECO2023 Principles of Microeconomics Final. Prepare with multiple choice questions, flashcards with helpful hints and explanations. Ace your exam!

The law of supply states that there is a direct relationship between the price of a good and the quantity supplied. As the price of a good increases, suppliers are typically willing to produce and sell more of that good because the higher price can cover higher production costs and offer greater potential profits. This encourages producers to increase their output in order to take advantage of the favorable market conditions. Conversely, a decrease in price would generally lead to a reduction in the quantity supplied, as producers may find it less profitable to produce as much of that good.

In this context, the idea that quantity supplied will increase as price rises is grounded in the incentives that higher prices create for suppliers. This concept is fundamental in microeconomics and helps explain how market supply functions in response to price changes.