Under the law of supply, which relationship best describes how price and quantity supplied are related?

Under the law of supply, which relationship best describes how price and quantity supplied are related?

• A. Inverse relationship
• B. Direct relationship
• C. No relationship
• D. Complex relationship

Answer: (B)

Price and quantity supplied move in the same direction: when price goes up, producers are willing to offer more of the good, and when price goes down, they offer less. This happens because higher prices increase the potential profit per unit, encouraging firms to raise output to earn more, while lower prices reduce incentives to produce as much. The supply curve reflects this by sloping upward, showing a positive relationship between price and quantity supplied, assuming other factors stay constant. This is different from the inverse relationship seen with demand, where higher prices lead to lower quantities demanded. A lack of relationship or a “complex” relationship isn’t the standard way supply is described in basic theory, where the focus is on this direct link between price and quantity supplied.

Price and quantity supplied move in the same direction: when price goes up, producers are willing to offer more of the good, and when price goes down, they offer less. This happens because higher prices increase the potential profit per unit, encouraging firms to raise output to earn more, while lower prices reduce incentives to produce as much. The supply curve reflects this by sloping upward, showing a positive relationship between price and quantity supplied, assuming other factors stay constant.

This is different from the inverse relationship seen with demand, where higher prices lead to lower quantities demanded. A lack of relationship or a “complex” relationship isn’t the standard way supply is described in basic theory, where the focus is on this direct link between price and quantity supplied.