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13 November, 08:33

Which best explains why the law of supply operates the way it does in a free enterprise economy?

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  1. 13 November, 08:39
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    Companies want to be as profitable as possible.

    In a free enterprise economy, new businesses emerge and operate with existing businesses with minimal interference from the government. This economic system is also identified as capitalism.

    Capitalist build businesses for the primary purpose of earning a profit.

    Law of supply states that all else equal, an increase in price will result to an increase in quantity supplied. In an capitalist economy, the more supply sold at a higher price, the higher your profit.
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