State The Law Of Supply In Economics

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.

State the law of supply in economics.

Law is one sided as it explains only the effect of change in price on the supply and not the effect of change in supply on the price. In practice people s willingness to supply and demand a good determines. If the demand for a product is high the supply becomes greater driving down the price. Law of supply explains the relationship between price and the quantity supplied.

This means that producers are willing to offer more of a product for sale on the. If an object s price on the market increases the producers would be willing to supply more of the product. 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. Terms in this set 13 supply.

Law of supply depicts the producer behavior at the time of changes in the prices of goods and services. The law of supply and demand is an unwritten rule which states that if there is little demand for a product the supply will be less and the price will be high and if there is a high demand for a product the price will be lower. However as the price of a good decreases suppliers will not want to supply as much of it. If an object s price on the market increases the producers would be willing to supply more of the product.

Law of supply states that other factors remaining constant price and quantity supplied of a good are directly related to each other in other words when the price paid by buyers for a good rises then suppliers increase the supply of that good in the market. Let us now try to understand why the supply of a commodity expands as the price rises. Reasons for law of supply. Th main reasons for operation of law of supply are.

Economics law of supply. Iii as the price of a good increases suppliers will want to supply more of it. Quantities respond in the same direction as price changes. In other words there is a direct relationship between price and quantity.