1.5 Supply

The Law of Supply

The law of supply is a fundamental principle in economics which states that, all else being equal, there is a direct relationship between the price of a good and the quantity supplied. This means that as the price of a good increases, the quantity supplied by producers also increases, and as the price decreases, the quantity supplied decreases. This positive relationship between price and quantity supplied is illustrated by an upward-sloping supply curve on a graph where the vertical axis represents price and the horizontal axis represents quantity supplied.