ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Supply is the willingness and ability of a producer to offer goods and services (or labor) for sale. Anyone who offers his or her time and skills in the labor market is a producer too. Supply depends on price.

Detailed explanation-2: -Supply shifters include prices of factors of production, returns from alternative activities, technology, seller expectations, natural events, and the number of sellers. An increase in supply is shown as a shift to the right of a supply curve; a decrease in supply is shown as a shift to the left.

Detailed explanation-3: -Firms need to sell their extra output at a higher price so that they can pay the higher marginal cost of production. Hence, decisions to supply are largely determined by the marginal cost of production. The supply curve slopes upward, reflecting the higher price needed to cover the higher marginal cost of production.

Detailed explanation-4: -law of supply all other factors being equal, there is a direct relationship between a good’s price and the quantity supplied; as the price of a good increases, the quantity supplied increases; similarly, as price decreases, the quantity supplied decreases, leading to a supply curve that is always upward sloping.