Which statement best captures the relationship between market prices and supply?

The correct answer highlights the fundamental principle that market prices have a direct influence on the quantity of goods and services that producers are willing to supply. When market prices rise, it creates an incentive for producers to increase supply, as they can achieve higher revenues and profits. Conversely, if market prices fall, suppliers may reduce the quantity they supply since the lower prices might not cover their costs or yield sufficient profit. This relationship between price and supply is illustrated by the law of supply, which states that there is a direct relationship between the price of a good and the quantity supplied, assuming all other factors remain constant.

The other options fail to capture this essential dynamic in the market. Some suggest that supply is unaffected by market prices, neglecting the responsive nature of producers to changing market conditions.