Law of Supply

The foundational economic concept known as the law of supply elucidates the relationship between the price and quantity of a specific good or service as provided by producers. Essentially, it posits that, holding other factors constant, an increase in the price of a commodity results in a proportionate expansion of the quantity producers are willing to supply, while a decrease in price corresponds to a reduction in the supplied quantity. This principle stems from the profit-maximising motive of producers, who aim to optimise their returns by offering larger quantities of goods at higher price levels. Graphically, the law of supply is illustrated by an upward-sloping supply curve, portraying the nuanced adjustments in quantity supplied in response to fluctuations in price.