According to the law of supply, the quantity of an item supplied will rise as a result of: A) an increase in the number of firms producing the item. B) decreases in the prices of inputs used to produce the item. C) an increase in the price of the item. D) a decrease in the price of the item.

Question

Business

Jimena Bush

2 April, 02:45

According to the law of supply, the quantity of an item supplied will rise as a result of: A) an increase in the number of firms producing the item. B) decreases in the prices of inputs used to produce the item. C) an increase in the price of the item. D) a decrease in the price of the item.

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Answers (1)

Know the Answer?

Dean Kidd · Answer 1

The answer is letter C, an increase in the price of the item.

Explanation:

In order to learn more about the answer, it is best to know what the Law of Supply is.

The Law of Supply is a fundamental principle in economic theory which states that, keeping other factors constant, an increase in price results in an increase in quantity supplied. This shows the direct relationship between price and quantity. It means that the quantity will respond in the same direction as price changes.

For example, if the price of a video game will increase, the company will make more copies of that video game. This also holds true if the price of the video game decreases. In this case, the company will lessen the supply of the video game.