How is supply illustrated? What do economists mean by the Law of Supply?
The supply curve, which reflects a supply schedule, shows a positive relationship between the price of a good, and quantities producers are willing to sell during a particular time period. The Law of Supply illustrates a positive relationship between price and quantity supplied. The higher the price, the greater the quantity of goods or services supplied; the lower the price, the lower the quantity of goods or services supplied to the market. The higher the price, the greater the total revenue (quantity sold x price) to the producer will be. The higher the price, the more likely the producer will be able to hire or employ more factors of production. Built into these relationships outlined above is the assumption that price is the only determinant of selling behaviour. To illustrate the Law of Supply, we have described the influence of price on quantity supplied. Other factors that shift the entire curve right or left will be discussed in another question and answer.
