admin The Law of Supply is a fundamental principle in economics stating that, all other factors being equal, as the price of a good or service increases, the quantity that suppliers are willing to produce increases. This direct relationship between price and quantity supplied forms the basis of supply analysis in markets.
Key Components of Supply Law
1. Price-Quantity Relationship: Higher prices incentivize increased production
2. Ceteris Paribus: The assumption that other market factors remain constant
3. Market Timeline: Short-term vs long-term supply responses
4. Supply Elasticity: Measure of supplier responsiveness to price changes