Australian Year 10 Economics Practice Test

The main idea is that producers respond to higher prices by offering more of a good for sale. When the price rises, each unit becomes more profitable to produce, so firms increase the quantity they are willing to supply. Conversely, when prices fall, they reduce the amount they supply. This direct relationship means the best description is that as price rises, quantity supplied increases. The other statements don’t fit this pattern. Higher prices don’t lead to less supply, supply isn’t independent of price, and a fall in price doesn’t cause more to be supplied. Also, remember that supply itself can shift due to non-price factors like technology or input costs, but the law of supply specifically describes how quantity supplied responds to price changes along the supply curve.