Meaning: -The law of supply establishes
a functional relationship between the price of a commodity and its quantity
supplied in the market.
Definition: -According to Marshall the
law of supply is defined as” Other thing being equal, the quantity of
a commodity supplied is directly related to its price”
In other words, more quantity of a commodity is
offered for sale at a higher price and less quantity is offered for sale at a
lower price. So supply of a commodity is directly related to its price.
Symbolically it can be stated as follows:
Sx = f (Px)
Where, S stands for supply, f stands for function
of, P stands for Price, x stands for a given commodity.
The
law can be explained with the help of supply schedule and a diagram.
Supply Schedule
|
Price
(Rs.)
|
Quantity
Supply (In Kgs)
|
|
1
2
3
4
5
|
10
20
30
40
50
|
The schedule shows that with an increase in price the
quantity supplied is also increasing. It indicates direct relationship between
the two variables Price and quantity supplied. When the price is Re. 1 the
seller offers only 10 units for sale. When Price increases to Rs.5 he
expands supply to 50 units.
In
the above diagram
X-axis represents quantity supplied and Y-axis
represents price. Various points from the schedule are plotted on the graph
join those points we will be getting supply curve which is called as named as
SS. SS sloped upward from left to right showing direct relationship between
price and quantity supplied. This happens when price is more, supply is also
more and when price is less, and supply is also less.
