Microeconomics in English
Law of Supply | Supply | Demand & Supply
Economics in English
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| Law of Supply | Supply | Demand & Supply | Economics in English |
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 is the direct function of price of a good and its supply. The law explains that when the price of a good increases, the quantity of its supply will increase and on the other hand if price decreases, its quantity supplied will also decrease with no change of cost of production”
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| Law of Supply | Supply | Demand & Supply | Economics in English |
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.
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| Law of Supply | Supply | Demand & Supply | Economics in English |
EXPALINATION OF GRAPH
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:
Certain assumptions have to be made when assigning and
applying a law. 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.
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