Question

State and explain the law of supply.

Answer 1

The law of supply is also a fundamental principle of economic theory, like the law of demand. It was introduced by Prof. Alfred Marshall in his book Principles of Economics, which was published in 1890. The law explains the functional relationship between price and quantity supplied.

Statement of the Law:

“Other things remaining constant, the higher the price of a commodity, the more is the quantity supplied, and the lower the price of a commodity, the less is the quantity supplied.” In simple words, “other factors remaining constant, a rise in price results in a rise in the quantity supplied and vice versa.

Thus, there is a direct relationship between price and quantity supplied.

Symbolically:

Sx = f(Px)

• S = Supply
• x = Commodity
• f = Function
• P = Price of commodity