Question

which of the following is true of the law of supply? a. suppliers will provide more of a good when its price is high. b. higher prices lead to less supply. c. lower profit margins leads to more supply. d. supply is driven by a suppliers desire to minimize profits. e. price decreases result in suppliers providing more goods.

Explanation:

The law of supply states that, ceteris paribus, as the price of a good increases, the quantity supplied of that good increases (suppliers are willing to provide more at higher prices to gain more revenue/profit). Option A aligns with this: suppliers provide more when price is high. Option B is wrong (higher prices should lead to more supply). Option C is wrong (lower profit margins would likely lead to less supply, as suppliers have less incentive). Option D is wrong (suppliers aim to maximize, not minimize, profits). Option E is wrong (price decreases should lead to less supply, not more).

Answer:

A. Suppliers will provide more of a good when its price is high.