Economics • Economic BasicsEasy
What is the primary implication of the 'Law of Supply' in price theory?
A. There is an inverse relationship between price and quantity supplied, other things remaining equal.
B. There is a direct relationship between price and quantity supplied, other things remaining equal.✓ Correct Answer
C. Supply creates its own demand under all market conditions.
D. Quantity supplied remains constant regardless of fluctuations in market price.
💡 Solution & Explanation
The Law of Supply establishes a direct relationship between price and quantity supplied, meaning producers are willing to offer more of a good as its market price rises. Inverse relationships describe the demand side rather than supply under standard market conditions. Price elasticity of supply measures the exact magnitude of this responsiveness.
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