Why is price directly related to quantity supplied? As price rises, suppliers rearrange their activities to supply more of a substitute good in order to take advantage of the higher price. As price rises, suppliers rearrange their activities to supply more of that good in order to take advantage of the higher price. As price rises, consumers substitute other goods whose price has not risen. As price falls, suppliers rearrange their activities to supply more of that good in order to take advantage of the lower price.

Based on the law of supply in Microeconomics, as the price of any good or service increases, the suppliers or sellers will also increase the supply of that particular good or service. Hence, the correct answer is the second option given in the answer choices.

Explanation:

Law of supply states that quantity supplied of any commodity or service has a direct or positive relationship with the price of that particular commodity or service. It basically implies that both commodity or service price and its market supply move in the same direction. Therefore, as the market price of any product or service increases, it s supply level in the market also rises as the sellers or suppliers will rearrange their production activities to increase supply attracted by the prospect of higher potential sales revenue due to higher price. Hence, possibilities to earn higher revenue from each unit of output sold due to price hike of any particular product or service, the sellers or suppliers will increase the supply of that product/service in the market.