Show
According to the law of supply, a direct relationship exists between the price of a good and the quantity supplied of that good. As the price of a good increases, sellers are willing to supply more of that good. The law of supply is also reflected in the upward‐sloping supply curve of Figure and in the algebraic equation of the supply schedule data of Table :
which has a positive slope of ½. Change in the quantity supplied. A change in the quantity supplied is a movement along the supply curve due to a change in the price of the good supplied. Suppose, in Figure , the price changes from $4 to $3. The change in the quantity supplied is found by moving along the supply curve, in this case to the left, from the old quantity of 8 units of good X to the new quantity of 6 units of good X. Change in supply. A change in supply, like a change in demand, is represented by a shift in the supply curve. Figures (a) and (b) illustrate two possible ways in which the supply curve for good X might shift: A leftward shift of the original supply curve, labeled S A, to the new supply curve S B, as depicted in Figure (a), results in a reduced supply of good X at all prices. A rightward shift of the original supply curve S A to the new supply curve S C, as depicted in Figure (b), results in an increased supply of good X at all prices.
Reasons for a change in supply. A change in supply or shift of the supply curve is not caused by a change in the price of the good being supplied; that would induce a change in the quantity demanded and a movement along the supply curve. A shift in the supply curve is caused by other factors, including:
3. Changes in technology: Advances in technology often have the effect of lowering the costs of production, allowing suppliers to supply more goods at all prices. For example, the development of pesticides has reduced the amount of damage done to certain crops and therefore has reduced the cost of farming. The result has been an increase in the supply of these crops at all prices, which can be represented by a shift to the right in the supply curves for these crops, as in Figure (b). What is the relationship between price of a good and quantity supplied of the good?An increase in price almost always leads to an increase in the quantity supplied of that good or service, while a decrease in price will decrease the quantity supplied.
What is the relationship between price and quantity for the law of supply?The law of supply
Law of supply states: As price of a good increases, the quantity supplied of the good rises, and as the price of a good decreases, the quantity supplied of the good falls, ceteris paribus. Restated: there is a direct relationship between price (P) and quantity supplied (Qs).
What type of relationship is there between price and quantity supplied?What's the relationship between price and quantity supplied? The price of the product and the quantity supplied of that product are related positively. The higher the product's price, the more its producers will supply; the lower the price, the less its producers will supply.
What is the relationship between quantity demand and the price of a good service?The total number of units purchased at that price is called the quantity demanded. A rise in price of a good or service almost always decreases the quantity demanded of that good or service. Conversely, a fall in price will increase the quantity demanded.
|