Define the law of supply.
Answers
Explanation:
The law of supply is a fundamental principle of economic theory which states that, keeping other factors constant, an increase in price results in an increase in quantity supplied.[1] In other words, there is a direct relationship between price and quantity: quantities respond in the same direction as price changes. This means that producers are willing to offer more of a product for sale on the market at higher prices by increasing production as a way of increasing profits.[2]
In short, the law of supply is a positive relationship between quantity supplied and price and is the reason for the upward slope of the supply curve
The law of supply is the microeconomic law that states that, all other factors being equal, as the price of a good or service increases, the quantity of goods or services that suppliers offer will increase, and vice versa. Thelaw of supply says that as the price of an item goes up, suppliers will attempt to maximize their profits by increasing the quantity offered for sale.
Keys Takeaway:-
1) The law of supply says that a higher price will induce producers to supply a higher quantity to the market.
2) Supply in a market can be depicted as an upward sloping supply curve that shows how the quantity supplied will respond to various prices over a period of time.
3) Because businesses seek to increase revenue, when they expect to receive a higher price, they will produce more.
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