[Soc Sci] Law of Supply

By jullianmariz.luchavez | Updated: Nov. 29, 2022, 6:33 a.m.

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Law of Supply 
?
What is
Supply?
Definition 
 it is behaviour of the firm that are producing and selling goods and services

Supply
There is a relationship between the price and the amounts produced
Law of Supply
states that there is a direct relationship between price and the amount of goods produced
higher prices = higher quantity of goods produced
lower prices = lower quantity of goods produced
=
more profitable
If the production cost is less than the market is willing to pay
=
If the production cost is more than the market is willing to pay
less profitable
For example, a pen...
Php 50.00
Php 90.00
Php 90.00
more pens produced
A supply curve depicts the relationship of the price and the quantity produced
Qs = c + dP
Relationship of Price and Quantitiy Produce
where:

Qs = quantity supplied
c =intercept
P= price
d = slope
when the price increases by Php 1.00, the quantity produced increases by 2
Qs = 2p
Price
0
0
50
100
90
180
240
120
Quantity
Government intervention can also affect the supply curve:
TaxesSubsidies
Higher taxes = higher production cost
Which means, it will hinder the production causing the supply curve to shift to the left.
SUbsidies on the other hand, increase the production;

Forcing the supply curve to shift to the right.
Price of related goods also affect the supply curve.
Php 50.00 
Php 120.00
Php 90.00 
Php 50.00 
Php 120.00
This results to a left shift in the curve
Reach out to:
Got more questions?
chen Timbreza
Jullian Luchavez

[Soc Sci] Law of Supply

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