The law of supply

Law of Supply – The law of supply states that, all else being equal, as the price of a product increases, the quantity supplied also increases, and vice versa. This is because higher prices create an incentive for producers to manufacture and sell more.

Supply Curve – A graphical representation of the relationship between price and quantity supplied. Typically, the supply curve slopes upward, indicating that as price increases, suppliers are willing to produce and sell more.

Types of Supply

Elastic Supply – When a small change in price leads to a significant change in the quantity supplied (e.g., manufactured goods).
Inelastic Supply – When a change in price has little impact on supply (e.g., limited natural resources like oil).

The Law of Supply and the Supply Curve

The Law of Supply is a fundamental principle in economics that states:

As the price of a good or service increases, the quantity supplied also increases.
As the price decreases, the quantity supplied decreases.

This happens because higher prices make production more profitable, encouraging businesses to produce and sell more. Conversely, when prices drop, suppliers may reduce production because it becomes less profitable.