Law of Supply - Supply Analysis, Business Economics & Finance Video Lecture | Business Economics & Finance - B Com

let's study what is the law of supply
let's see what the law of supply states
the law of supply states other things
being constant other things being
constant in Latin other things being
constant is termed as ceteris paribus
other things being constant the quantity
of a good produced and offered for sale
will increase as the price of the good
Rises see the quantity supplied of a
good will increase it will increase as
the price is increasing and it will
decrease as the price falls as a prize
pause so when price increases supply
also increases when price holds supply
also Falls so we can say that there is a
direct relation between price and supply
now let's understand this better with
the help of a schedule and a graph now
this schedule explains the price per kg
of let's say rice and the quantity
supplied of rice at that price so when
the price is 1 the quantity supplied is
5 when the price is 2 the quantity
supplied jumps to 35
and the price increases to three the
quantity supplied also increases to
quantify and the price is four supply
becomes fifty-five and finally when the
price is increased to five per kg the
quantity supplied increases to 65 kgs
now if you plot this point on the graph
taking quantity supplied on the x-axis
and price on the y-axis we plot this
point one and five let's say this is a
point eight two and thirty five this is
a point P three and forty five point C 4
and fifty five ninety five and sixty
five point E and when we join all these
points what we get is the supply curve
this curve is called the supply curve
and this curve always has a positive
slope that is it slopes upwards from
left to right so the supply curve has a
positive slope that is it slopes upwards
from left to right in demand we studied
the demand schedule and the demand graph
in the demand graph we derived the
demand curve the demand curve is always
downward sloping it has a negative slope
whereas the supply curve has a positive
slope now let's understand why does the
supply curve as a positive slope
if you observe closely as the price is
increasing the quantity supply is also
increasing at every level where the
price is increasing the quantity
supplied is increasing so this leads to
an upward sloping of the supply curve
where there is a positive change in
price there is a positive change in the
supply so we say the supply curve has a
positive slope