Which concept describes the economic law that links price to the quantity supplied?

• A. Demand
• B. Law of Supply
• C. Substitute Good
• D. Revenue

Answer: (B)

The concept being tested is the positive relationship between price and quantity supplied. The law of supply says that, all else equal, when the price of a good rises, producers are willing to offer more of it for sale. This happens because higher prices improve profitability and help cover the higher marginal costs that come with producing more units, so firms have an incentive to increase output. The result is an upward-sloping supply curve, where quantity supplied rises as price rises.

This idea is different from demand, which links price to quantity demanded in the opposite direction. It’s also unrelated to a substitute good, which refers to competing products that can replace each other, or to revenue, which is total income from sales and not the direct price–quantity relation.