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Which of the following best describes the law of supply? A
Which of the following best describes the law of supply?
A. An increase or decrease in the price of a good will increase or decrease the amount producers are willing and able to produce and sell.
B. An increase or decrease in the price of a good will decrease or increase in the amount producers are willing and able to produce and sell.
C. An increase or decrease in the amount producers are willing to produce and sell will increase and decrease the price of the good.
D. An increase or decrease in the amount producers are willing to produce and sell will decrease or increase the price of the good.
E. An increase or decrease in the quantity demanded by consumers will increase or decrease the amount producers are willing to produce and sell.
Expert Solution
The correct answer is A. An increase or decrease in the price of a good will increase or decrease the amount producers are willing and able to produce and sell.
Explanation: Law of supply states that there is a direct relationship between the prices of goods and services and their quantity supplied. This means that when the prices of goods and services increase, the quantity supplies by the producers also increases. And if prices decrease, quantity supplied also decreases. This happened because when prices rise, supplies get more money in exchange for their goods, so they increase their production and quantity supplied.
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