How does an increase in price affect the quantity supplied?

An increase in price typically leads to an increase in the quantity supplied. This relationship is based on the law of supply, which states that, all else being equal, as the price of a good or service rises, producers are willing to supply more of it to the market. Higher prices generally incentivize producers to ramp up production because they can cover their costs more effectively and potentially increase their profits. As a result, suppliers are more likely to enter the market, expand their operations, or allocate more resources toward the production of that good, resulting in a higher quantity supplied.

In contrast, factors such as a decrease in price would lead to a lower quantity supplied, as producers would typically be less motivated to produce goods that yield lower revenues. The concept of a supply curve also illustrates this relationship; it generally slopes upward from left to right, reflecting that higher prices correspond with higher quantities supplied. Therefore, the correct answer identifies the direct relationship between price and quantity supplied as a fundamental principle of economics.