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Proposed definitions will be considered for inclusion in the Economictimes.com (##include msid=4006719,type=11 ##) Definition: Law of supply states that other factors remaining constant, price and quantity supplied of a good are directly related to each other. In other words, when the price paid by buyers for a good rises, then suppliers increase the supply of that good in the market. Description: Law of supply depicts the producer behavior at the time of changes in the prices of goods and services. When the price of a good rises, the supplier increases the supply in order to earn a profit because of higher prices.
The above diagram shows the supply curve that is upward sloping (positive relation between the price and the quantity supplied). When the price of the good was at P3, suppliers were supplying Q3 quantity. As the price starts rising, the quantity supplied also starts rising. Snapshot: This is how the law of supply works...
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When change on the quantity supplied is proportional to the change in price?According to the types of elasticity of demand, when the change in the quantity demanded is exactly proportionate to the change in the price, the elasticity of demand will be equal to one.
When a given proportionate change in price brings about an equally proportionate change in quantity supplied it is known as?The price elasticity of supply is given by a similar formula: If the percentage change in quantity demanded is greater than the percentage change in price, demand is said to be price elastic, or very responsive to price changes.
When a proportionate change in quantity demanded of a commodity and a proportionate change in price relates to *?If change in the demand of the commodity is proportionate to the change in price, the demand of the commodity is known as unit elasticity.
When the proportionate change in the supply of goods is more than the proportionate change in its price the elasticity of supply will be?Supply is price elastic when the percentage change in quantity supplied is greater than the percentage change in price, and supply is price inelastic when the percentage change in quantity supplied is less than the percentage change in price.
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