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Economics IGCSEPDF 26
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The Law of Supply
Statement:
Extension in Supply
Contraction in Supply :
Definition of Supply
Supply:
want and willingness
Quantity Supplied:
Market Supply:
total
Changes in Quantity Supplied (Movement Along the Curve)
only
price of the good itself
Changes in quantitysupplied are caused
byachangeinthe
resultsin a movementalong the existing supply curve.
:An increase in quantity supplied due to an increase in price.
A decrease in quantity supplied due to a decrease in price.
•
The law of supply states that there is a positive (or direct) relationship between
price andquantity supplied (ceteris paribus).
•An increase in price leads to an increase in supply (or quantity supplied).
•A decrease in price leads to a decrease in supply (or quantity supplied).
•Rationale: Producers are motivated by profit. A higher price increases profitability,
encouraging firms to produce and supply more.
.This
•
•
The
of producers to supply a good or service at a given price.
The specificamount of goods or services producers are willing to make
and supply.
•
The
amountofgoods and services all producers of that product are
willingtosupply, or the sum ofallindividual supplies.