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Question
With the help of a diagram state whether supply of a good is directly or inversely related to price?
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Solution
The law of supply states that the supply of a good changes directly with its price, other factors influencing supply, remaining unchanged. This can be explained with the help of a diagram.
In the diagram, quantity supplied is measured on the x-axis and price along the y-axis. We find that at price OP, quantity supplied is OQ. At a higher price of OP1, the firm is willing to sell OP1 quantity of the good. And at a price lower than OP say OP2, the firm is willing to supply only lesser quantity i.e. OQ2.
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RELATED QUESTIONS
State the law of supply.
State with reason whether you agree or disagree with the following statement:
There is a direct relationship between price and quantity supplied.
Price and Supply move in the same direction. Justify the statement.
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Which statement best expresses the Law of Supply?
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Which of these situations violates the "ceteris paribus" (other things being constant) condition for the Law of Supply?
What is the relationship between price and quantity supplied described by the Law of Supply?
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What does the supply curve typically look like according to the Law of Supply?
