ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The law of supply is the microeconomic law that states that, all other factors being equal, as the price of a good or service increases, the quantity of goods or services that suppliers offer will increase, and vice versa.

Detailed explanation-2: -What is the law of supply? producers offer more of a good as its price increases and less as its price falls.

Detailed explanation-3: -According to basic economic theory, the supply of a good will increase when its price rises. Conversely, the supply of a good will decrease when its price decreases. There’s also price elasticity of demand. This measures how responsive the quantity demanded is affected by a price change.

Detailed explanation-4: -The law of supply says that when prices rise, companies see more profit potential and increase the supply of goods and services. The law of demand states that as prices rise, customers buy less. Theoretically, a free market will move toward an equilibrium quantity and price where supply and demand intersect.

Detailed explanation-5: -Generally, an over-supply of goods or services causes prices to go down, which results in higher demand-while an under-supply or shortage causes prices to go up resulting in less demand. The balancing effect of supply and demand results in a state of equilibrium.