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1) Which answer choice correctly states the relationship between product price and quantity supplied?

A)  As price increases, quantity supplied increases.

The Supply curve is upward sloping, this means that the higher the price, the more quantity supplied. This is because producers obtain more profit when they can sell their products at high prices.

2) Which of the following illustrates the inverse relationship between price and quantity demanded of a particular good?

B)  As price of the good decreases, the quantity of the good demanded

increases

The demand curve is downward sloping, this means that the higher the price, the less quantity demanded, and the lower the price, the more quantity demanded. This is because consumers are interested in lower prices in order to obtain more goods for the same amount of income.