Which law states that suppliers offer more of a good at higher prices?

Which law states that suppliers offer more of a good at higher prices?

• A. Law of Diminishing Returns
• B. Law of Demand
• C. Law of Supply
• D. Law of Scarcity

Answer: (C)

The main idea is that suppliers respond to higher prices by offering more of the good, all else equal. When the price increases, the potential profit from selling each unit is higher, so producing and selling more units becomes worthwhile. That incentive pushes the quantity supplied upward, which is why the supply curve slopes upward: higher prices motivate firms to expand production or allocate more resources to that good. This behavior holds in typical market conditions, though real-world limits like capacity can cap how much can be increased. The other options don’t describe this producer-side response. The law of diminishing returns deals with how adding more inputs to a fixed resource eventually yields less additional output, not with how price affects supply. The law of demand describes how, all else equal, higher prices reduce the quantity demanded by consumers, not how producers respond. The law of scarcity refers to the fundamental problem of limited resources and unlimited wants, not the specific price-quantity relationship of supply.

The main idea is that suppliers respond to higher prices by offering more of the good, all else equal. When the price increases, the potential profit from selling each unit is higher, so producing and selling more units becomes worthwhile. That incentive pushes the quantity supplied upward, which is why the supply curve slopes upward: higher prices motivate firms to expand production or allocate more resources to that good. This behavior holds in typical market conditions, though real-world limits like capacity can cap how much can be increased.

The other options don’t describe this producer-side response. The law of diminishing returns deals with how adding more inputs to a fixed resource eventually yields less additional output, not with how price affects supply. The law of demand describes how, all else equal, higher prices reduce the quantity demanded by consumers, not how producers respond. The law of scarcity refers to the fundamental problem of limited resources and unlimited wants, not the specific price-quantity relationship of supply.