Assumptions of Law of Supply

What is Law of Supply?

Economists have studied the behaviour of both buyers and sellers. They have discovered the law of supply as a result of their findings. The law of supply describes the relationship between price and amount supplied when all other variables remain constant (ceteris paribus)....

Assumptions of Law of Supply

The phrase “keeping other factors constant or ceteris paribus” is used when describing the law of supply. This expression refers to the following presumptions that the law is based on:...

Graphical Presentation of Law of Supply

The Law of Supply can be better understood with the help of the following table and graph....

Important Points about Law of Supply

The law of supply states the positive relationship between price and quantity supplied of a commodity after assuming that the other factors remain constant. As the law of supply indicates the direction of the changes in quantity supplied of a commodity and not the magnitude of the change. It is considered as a quantitative statement. The law of supply does not establish any proportional relationship between the change in price and the respective change in quantity supplied of the commodity. The law of supply is one sided. It is because the law explains only the effect of change in price on the supply of the commodity and not the effect of change in supply on the price of the commodity....

Reason for Law of Supply

The main reasons behind the law of supply are as follows:...

Exceptions to the Law of Supply

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Law of Supply – FAQs

How does the Law of Supply relate to price?...