Law of Supply and its Application

Definition of Supply:

“Supply is the part of the total stock which is being offered for sale at the specific price in the given or proper time”

Law of Supply:

“Supply is the relationship between price of a good and quantity of its supply. The law explains that when the price of a good increases, the quantity of its supply will increase similarly, if the price decreases, its quantity supplied will also decrease with no change in cost of production or other goods”

 EXPALINATION OF TABLE

The table explains the law of Supply. There are two columns in the table, right one for supply and the left for price data.

We see that when the price of a good (say a chocolate), is Rs:10, the supply of the good is 100 units. When price increases to Rs.20, its supply also increases to 150 units. The price of the good continues to increase & reaches at Rs.50 and supply of the good goes to 300 units increasingly too.

It proves that if price of the increases, supply of that good also increases and if the price decreases, supply of  that good will also decrease.

EXPALINATION OF GRAPH

                                          

The graph explains the law of Supply. The prices of the good is measured on y- axis and quantity of supplied is measured on x-axis.

We may see that the supply curve SS is a positive sloped verve which goes from left to right upwards and indicates the price of the good is increasing and the supply of the good is also increasing at the same time without any pause or break.  

The price of the good increases from Rs.10 to Rs.50 and its supply reaches at 300 units from 100 units in the specific time proving that the price of and supply of the good acts directly.

Assumptions / Conditions of the law:

When assigning any law and applying this law, certain assumptions have to be made. In the same way, some basic conditions have also been laid down for the validity of the law of demand. ۔ All of these conditions are assumed to be static when describing the law of the law. However, under normal circumstances and conditions, all these conditions remain dynamic.

These are as under:

No change in cost of production.
No change in methods of production.
No change in quantity of production.

                 <-- please visit my youtube channel for more details and video on the topic -->