Law of Supply
The law of supply states "There is direct relationship between price of a commodity and quantity supplied, other things remaining the same." It means quantity supply of a commodity increases with the rise in price and decreases with the fall in price. Symbolically,
The law of supply can be explained by the following supply schedule :
The above table shows that the quantity supplied from 10 to 20 units, 20 to 30 units, 30 to 40 units and 40 to 50 units increases with the rise in price from Rs.1 to 2, Rs. 2 to 3, Rs. 3 to 4, and Rs. 4 to Rs. 5 respectively. This table can be presented in the in the figure below:
In the figure, the upward slopping straight line represents the supply curve, which shows that positive relationship between price and quantity supply.
Chapter 2 Part 12
