The Law of Supply and Kayak Pricing

What does the law of supply state?

The law of supply states that other things remaining the same, a decrease in the price of a kayak leads to A) a decrease in the supply of kayaks. B) an increase in the supply of kayaks. C) a decrease in the quantity of kayaks supplied. D) an increase in the quantity of kayaks supplied. E) an increase in the supply of kayaks and a decrease in the quantity of kayaks supplied.

Final answer: The law of supply suggests a decrease in the price of a kayak would lead to a decrease in the quantity of kayaks supplied.

Explanation: The law of supply in economics dictates a common relationship where a higher price generally stimulates a greater quantity supplied and conversely, a lower price results in a lower quantity supplied, assuming that all other variables are held constant. In the context of your question, a decrease in the price of a kayak would lead to C) a decrease in the quantity of kayaks supplied. This is because, with a lower price, the motivation for producers to supply the product to the market also decreases, resulting in a lower quantity supplied. A price decrease moves us along the supply curve, which uniformly exhibits this negative relationship between price and quantity supplied, as per the law of supply.