What does the law of supply state?

The law of supply asserts that there is a direct relationship between the price of a good and the quantity of that good that producers are willing to supply. Specifically, as the price increases, suppliers are more inclined to produce and offer more of that good in the market. This is because higher prices typically signal potential for greater revenue, incentivizing producers to increase their output to capitalize on those prices.

In a market where the price of a good rises, existing producers will likely increase production to maximize profits. Additionally, higher prices may attract new producers to enter the market, further expanding the quantity supplied. This positive correlation between price and quantity supplied is a fundamental concept in economics, establishing a clear framework for understanding market behavior.

In contrast, the other statements do not align with the law of supply. For instance, the idea that income increases lead to a decrease in supply overlooks the fundamental principle that supply is driven by price rather than income levels directly. Similarly, stating that an increase in demand results in a decrease in supply fails to recognize that demand influences price, which in turn affects supply. Lastly, the assertion about consumer preferences affecting supply while keeping it constant does not accurately reflect how supply responds to market signals, including changing preferences. Thus, the understanding of supply primarily