Useful Notes on the “Law of Supply”
The law of supply shows a direct relationship between price and supply of a commodity. The law states that as the price of commodity increases, the quantity of the commodity supplied per unit of time increases and vice-versa, assuming all other factors influencing supply remain unchanged. In this statement, change in price is the cause and change in supply is the effect. Thus, price rise leads to supply rise and not otherwise.The relationship between price and supply can be shown by drawing the supply curve. The supply curve for a product depicts the direct relation between the price of that commodity and the quantity, producers wish to supply at that price. ADVERTISEMENTS: This curve can be drawn by preparing supply schedule, which is a tabular statement that gives different prices…