myz-vgb.ru A Business Encyclopedia

Law of Supply

Definition: The Law of Supply posits that there is a positive relationship between the supply of a commodity and its price, such that the supply of the commodity increases with the increase in its price and decreases with the fall in its price, other things remaining constant.

Here, “other things” are the factors that influence the supply of the commodity such as technology, input prices, price of related products, nature and size of the industry, government policy, etc. The law of supply is based on the notion, that as the price of a product increases the suppliers with an objective to maximize their profits increases the production of a commodity for sale.

The concept of the law of supply can further be illustrated by Supply Schedule and Supply Curve.

Supply Schedule: The supply schedule is the tabular representation of the different prices of the commodity and the corresponding quantities that the suppliers are willing to offer for sale. A hypothetical daily supply schedule of rice is given below:

Price of Rice/KgSupply of Rice/day
(In Kg)
Price quantity combinations
105A
116B
127C
138D
149E
1510F
1611G

The law of supply is well substantiated through the table above, which shows that the supply of rice increases with the increase in the price.  Such as when the price of rice is Rs 14/ kg the supply of rice is 9/Kg and as the price rise to Rs 15/kg the supply also increases to 10/kg.

Supply Curve: The supply curve is the graphical representation of the supply schedule which shows different combinations between the price and the quantity supplied.

Supply Curve
SS’ is the upward sloping supply curve, which depicts the law of supply, i.e. the supply of rice increases with the increase in its price.

Leave a Reply

Your email address will not be published. Required fields are marked *

Shares

Related pages


statical methodexamples of referent powerexample of indifference curvedef of internshipretrench meaninglaw of dimnishing marginal utilitysimultaneously means in hindiexplain elasticity of demandscientific management theory of organizationemployees epfkisan vikas patra schemestraddle meanslikert motivation theoryfixed deposit in post office schemesfounder of classical conditioningjit definedefinition of orientation in hrmemotional barriers definitionconcept of shrmdefine travellerdefinition of deontology ethicsdialectic meaningfounder of classical conditioningtriat theorymne definition businesstheory of motivation pptsampling errors in researchformal and informal communication channelsordinal defadvantages of retained earningsoperant theory of motivationsales promotion in marketing mixlikert rating scale examplesjob evaluation in hrmfmcg definewho is david mcclellandseasonal unemployment definition economicsreinforcement theory by bf skinnerperfectly competitive market characteristicsaccelerator principle economicsautocratic managementincentive plans in hrmdemat account meaningintegrative bargaining definitionhence meaning in hindiretailing definition marketingwhat is the definition of variable expensesjohari window feedbackdiminishing marginal utility of moneyverbal communication wikiwhat is job enlargement with exampleguerrilla multilevel marketingsystematic sampling methodsmeaning of exploitativeconsistent meaning in tamilconglomerate diversification strategyturnover formula accountingclassical theoristdeterminants of the price elasticity of demandcyclically unemploymentdefinition ulteriorprogramme evaluation and review techniquefiedler leadershipcharacteristics of an oligopolydefine queuing systementrepreneurship as a theory of business was propounded bymultiplier process economics definitionteleological and deontological ethicswhat is staffing in hrmdeterminants of consumer buying behaviourattrition meaning in hrdisinvestment meaningcaptives definitiondeterminants of individual demandcross elasticity of demand substituteselasticity of demand noteswhat is the johari windowsimulated test marketing definitionconsumer equilibrium equationimportance of collective bargaining pptinelastic demand definition