Law of Supply
According to the law of supply, there is a direct relationship between supply and the price of a product or service under cetirus peribus assumption (i.e. other things being equal). Law of supply states that the quantity of a product or resource made available for sale by a producer or a resource owner varies directly with the price of the product or resource respectively provided that other things remain constant.
It is important to note that supply is affected by a number factors in addition to price and the law of supply applies only under the assumption that other things remain constant.
There are lots of examples of economic behavior which is in conformance to the law of supply. For example, a fruit vendor will try to make available more fuits for sale when the fruit prices prices are high and relatively less when the prices are low.
The law of suppy can be presented in the form of a graph between the price and the quantity supplies of a product as shown below:
The above supply line has a positive slope thus indicating that there is direct relationship between the price of a product and the quantity supplied. As the price increases, producers and resource ownsers will supply more.
Written by Irfanullah Jan