Question

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

Companies want to produce more goods than their rivals.
Companies want to reward loyal consumers with low prices.
Companies want to hire as many workers as possible.
Companies want to be as profitable as possible.

Answer 1

Companies want to be as profitable as possible.

Explanation: in a free enterprise economy, higher prices make producing additional units more profitable (covering higher marginal costs), so firms increase quantity supplied to maximize profit.