Which economic law states that as the price of a good or service increases, the quantity supplied increases, and vice versa?

• A. Law of Demand
• B. Revenue
• C. Elasticity
• D. Law of Supply

Answer: (D)

Prices influence how much producers are willing to supply. The law of supply holds that, all else equal, a higher price leads to a higher quantity supplied and a lower price leads to a lower quantity supplied. This positive relationship exists because higher prices make production more profitable, encouraging more output, while lower prices reduce profits and discourage production. The law of demand describes buyers’ behavior on the other side of the market, elasticity is about how responsive quantity is to price changes, and revenue is just a financial measure, not a directional rule about price and quantity.