According to the law of supply, producers provide _____ of a good when the price _____.Multiple choice question.less; increasesless; decreasesmore; decreases
Question
According to the law of supply, producers provide _____ of a good when the price _____.
Multiple choice question.
- less; increases
- less; decreases
- more; decreases
Solution
The law of supply states that there is a direct relationship between the price of a good and the quantity of that good that producers are willing to supply. In other words, as the price of a good increases, producers are incentivized to supply more of that good to the market because higher prices can lead to greater potential revenue and profits. Conversely, if the price decreases, producers may supply less of that good since the incentive to produce diminishes.
Final Answer
Producers provide more of a good when the price increases. Therefore, the correct answer is more; increases.
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