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Holding input costs and every other market factor fixed, what does the law of supply say happens to quantity supplied when the price of a good rises?
AQuantity supplied almost always falls
BQuantity supplied almost always rises
CQuantity demanded almost always rises
DQuantity supplied stays exactly fixed
Answer & Solution
Correct answer: B. Quantity supplied almost always rises
1. The law of supply isolates the effect of price alone on quantity supplied, holding production costs constant.
2. A higher selling price makes production more profitable, so firms want to sell more.
3. Quantity supplied almost always rises when price rises, and falls when price falls.
4. Option C describes buyer behavior, which is the demand side, not the supply side.
_Source: OpenStax Principles of Macroeconomics for AP Courses (CC BY 4.0), Ch 3 "Demand and Supply", section 3.1 | Demand, Supply, and Equilibrium in Markets for Goods and Services_
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