Answer to Question #247879 in Economics of Enterprise for Sadam Dine

Question

According to the law’s supply, the higher the price of commodity, the higher will be quantity supplied. Explain why.

Answer 1

Solution:

The law of supply is a microeconomic law that states that all else being equal, as the price of a good or service rises, so will the quantity of goods or services offered by suppliers, and vice versa. This is because producers aim to make more revenue and they will find it more profitable to make products when their prices are high in the market. The high prices motivate them to produce more goods and distribute in the market so that they can maximize their profits