The law of supply states that:

A Supply is always constant

B As the price of a good increases, the quantity supplied increases, all else being equal

C Higher prices reduce supply

D Supply depends only on costs

✓ Correct Answer: Option B

Law of supply: positive relationship between price and quantity supplied. Higher price → more profitable → incentive to produce more. Upward-sloping supply curve.

💡 Why is B) the correct answer?

The correct answer to the question "The law of supply states that:" is Option B: As the price of a good increases, the quantity supplied increases, all else being equal.

The other options — A) Supply is always constant, C) Higher prices reduce supply, D) Supply depends only on costs — are incorrect for this Pre-MBA Exam Prep question. As explained above: Law of supply: positive relationship between price and quantity supplied. Higher price → more profitable → incentive to produce more. Upward-sloping supply curve.

📚 About This Pre-MBA Exam Prep Practice Question

This 1-level Pre-MBA Exam Prep question from the Economics topic is part of BrainForge Quiz's free exam preparation library. Each question includes the correct answer and a detailed explanation to help you understand the underlying concept, not just memorize the answer.

How to use this page: Read the question above, consider all four options (A through D), then check the highlighted correct answer and explanation. For active timed practice, start a free Pre-MBA Exam Prep practice test or use flashcards for spaced repetition review.

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The law of supply states that:

✓ Correct Answer: Option B

📚 About This Pre-MBA Exam Prep Practice Question

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