According to the Law of Supply,
A) price and quantity supplied are positively related,
B) firms produce less output as the price of the product rises, ceteris paribus
C) marginal cost rises as the firm contracts production
D) there is an inverse relationship between output and price, holding all else constant

Question

Quizplus · Accepted Answer

The Law of Supply states that there is a positive relationship between price and quantity supplied, ceteris paribus. This means that as the price of a product increases, the quantity supplied by firms also increases, and vice versa. This relationship is based on the assumption that all other factors affecting supply remain constant.