Which of the following is consistent to the law of supply?

A. As the price of product falls, certeris paribus, suppliers will offer less for sale.

B. As the price of product falls, certeris paribus, the supply will remain steady.

C. As the price of product rises, certeris paribus, suppliers will offer more for sale.

D. As the price of product rises, certeris paribus, the supply will remain steady.

Answer: C. As the price of product rises, certeris paribus, suppliers will offer more for sale.

An increase in the price of goods leads to an increase in the amount supplied by a supplier. According to the law of supply, “with all factors constant, an increase in price will lead to an increase in the number of goods supplied”. This is so because; suppliers will like to make money during an increase in the price of goods. Suppliers try as much as possible to utilize the hike in price. In some cases, the consumers have no option but to conform to the change in price. This is so if it concerns a basic product like water.

Economics

3 years ago

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