Theory of Supply

Date: 2023-02-08

Supply of a good refers to the amount of a good a producer is willing and able to sell in a given period of time, at a given price, ceteris paribus.

The main objective of producers is to maximise profits.

The Law of Supply

The law of supply states that in a given time period, the quantity supplied of a product is *directly related to its price, ceteris paribus.

Factors affecting Supply

Change in price, causes shift along the curve Change in non-price factors, causes shift of entire curve.

Vertical Supply Curve

Whatever the price, the same quantity is supplied (fixed) e.g. supply of rare antiques


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