What does the law of supply state?

The law of supply states that, all else being equal, an increase in the price of a good leads to an increase in the quantity supplied of that good. This relationship occurs because higher prices provide an incentive for producers to supply more of a good, as they can potentially earn greater revenue and profits. When producers see that they can sell their goods for a higher price, they are motivated to increase production levels to capitalize on that opportunity.

In a market context, this principle illustrates how supplier behavior is influenced by price variations. When prices rise, it becomes more profitable for businesses to produce and sell more, thus increasing the quantity supplied. Conversely, if prices were to fall, the incentive to produce might diminish, leading to a reduction in the quantity supplied.

The other options do not accurately describe the law of supply. For example, statements related to income or changes in consumer preferences focus on different economic principles or concepts that do not consider the direct relationship between price and quantity supplied. The law of supply specifically emphasizes the direct correlation between price and the quantity that producers are willing to offer for sale.