Question

What is the relationship between price and supply?

Direct

inverse

Proportionate

Zero

​

Answer 1

Answer:

Economists call this positive relationship between price and quantity supplied—that a higher price leads to a higher quantity supplied and a lower price leads to a lower quantity supplied—the law of supply.

Explanation:

Answer 2

Answer:

Supply is the quantity that producers are willing and able to produce and sell at various per unit price per period of time, ceteris paribus. Unlike quantity demand, which has a negative relation or inversly proportional to price of any particular product, supply has a positive or is directly proportional to price. This means that when price of a product increases the quantity supplied also increases and vice versa. There is no shift in supply caused due to increase or decrease in price, rather causes contraction(decrease quantity of supply) or extaction(increase quantity of supply). This extraction and contraction of supply occurs because at high price(above equilibrium) producers have incentive to sell more and earn more by supplying more quantity whereas at low price(below equilibrium) producers are demotivated to sell more quantity since they will be earning less.