A Level Economics AQA Practice Exam

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Prepare for the A Level Economics AQA Exam with our interactive quiz. Test your knowledge with multiple choice questions and detailed explanations. Equip yourself with the tools needed for success!

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According to the Law of Supply, what happens as the price of a good increases?

Producers will offer less of that good
Consumers will buy more of that good
Producers will offer more of that good
Demand will decrease for the good

The correct answer is: Producers will offer more of that good

The Law of Supply states that, all else being equal, as the price of a good increases, the quantity supplied of that good also increases. This relationship is grounded in the incentive for producers; higher prices typically lead to higher potential profits, encouraging producers to allocate more resources to the production of that good. Consequently, they are willing to offer more of it in the market. When prices rise, producers may invest in additional labor, raw materials, or technology to increase output, responding directly to market signals. This behavior reflects a fundamental understanding of market dynamics, where prices serve as signals to both buyers and sellers. Therefore, the correct response highlights the direct relationship between price and the quantity of goods that producers are willing to supply in the market.