State the law of supply and two reasons why the supply curve slopes upward.

• A. The law of supply: as price rises, quantity supplied increases; reasons: higher price makes production more profitable; decreasing marginal costs with higher output lead to higher quantities supplied.
• B. The law of supply: as price rises, quantity supplied decreases; reasons: higher price de-incentivizes production; fixed costs.
• C. The law of supply: price has no effect on quantity supplied; reasons: supply is fixed.
• D. The law of supply: as price falls, quantity supplied increases; reasons: higher price costs rise with output.

Answer: (A)