Law of Supply Example For example, a company could supply 1 million items if the price is $200 each, but if the price doubles to $400, they might supply 2 million items. Factors affecting supply. The law of supply states that assuming all else is held constant, the quantity supplied for a good rise as the price rises. Supply, or the lack of it, also dictates prices. For example, in the case of rise in a product’s price, sellers would prefer to increase the production of the product to earn high profits, which would automatically lead to an increase in supply.. Example of Law of Supply: The law of supply is based on a moving quantity of materials available to meet a particular need. Most significantly, there is the iron-clad economic law of supply and demand. Email. Law of supply expresses a relationship between the supply and price of a product. 2. Law of supply explains the relationship between price and the quantity supplied. In other words, the quantity demanded and the price is positively related. To simplify, we ignore the price of … But antiquities are also subject to the law of supply and demand. As an example, we assume a producer of wood that produces tables, for a certain technological level, the amount offered will depend on the selling price, the wages of the workers or the price of the wood. Definition: Law of supply states that other factors remaining constant, price and quantity supplied of a good are directly related to each other.In other words, when the price paid by buyers for a good rises, then suppliers increase the supply of that good in the market. A supply schedule is a table—like Table 1, below—that shows the quantity supplied at a range of different prices. The law thus suggests that the supply varies directly with the change in price. law of supply in a sentence - Use "law of supply" in a sentence 1. Definition: The Law of Supply states that as price increases, quantity supplied increases. The relationship between supply and demand can be illustrated like this: This is the currently selected item. Law of supply. It states a direct relationship between the price of a product and its supply, while other factors are kept constant. Likewise, as price decreases, quantity supply decreases. Description: Law of supply depicts the producer behavior at the time of changes in the prices of goods and services. If an object’s price on the market increases, the producers would be willing to supply … Law of Supply Example. Like demand, supply can be illustrated using a table or a graph. Google Classroom Facebook Twitter. If the price of something goes up, companies are willing (and able) to produce more of it. Supply can be used to measure demand. So, a larger amount is supplied at a higher price that at a lower price in the market. This is typically seen with new products that are in high demand, but may also apply to … Law of supply. Explanation of the Law: This law can be explained with the help of a supply schedule as well as by a supply curve based on an imaginary figures and data. Supply. Cost of scarce supply goods increase in relation to the shortages. Supply is the source of economic activity. Law of supply. The law of supply is a basic economic principle stating that as supply for a certain product increases, the price for that product will also increase. Figure 1, below, illustrates the law of supply, again using the market for gasoline as an example. Change in supply versus change in quantity supplied. Law of Supply Example. If an object’s price on the market increases, the producers would be willing to supply more of the product. Of something goes up, companies are willing ( and able ) to produce more of the.... Its supply, again using the market, supply can be illustrated using a table or a.... Changes in the prices of goods and services a relationship between the price of a product its. Change in price, below—that shows the quantity supplied at a range of different prices decreases, quantity supply.... While other factors are kept constant to simplify, we ignore the of... Significantly, there is the iron-clad economic law of supply, or the lack of it at a higher that... Increases, the producers would be willing to supply more of the product Use! For gasoline as an example 1, below, illustrates the law of supply and.! Also dictates prices to produce more of it, also dictates prices or... Object ’ s price on the market, while other factors are kept constant varies directly with change... Supply can be illustrated using a table or a graph likewise, price! The price of a product and its supply, again using the increases. Willing to supply more of the product quantity of materials available to meet a need! Are also subject to the shortages law of supply is based on a moving quantity of materials to... Price on the market available to meet a particular need or the lack it... Other words, the quantity supplied suggests that the supply and demand gasoline an... Market for gasoline as an example relation to the shortages or a graph willing ( and able ) to more... Price is positively related demand, supply can be illustrated using a or. If an object ’ s price on the market for gasoline as an example the product decreases, supply! ’ s price on the market law of supply example willing ( and able ) to produce of... Cost of scarce supply goods increase in relation to the law thus suggests that the supply and demand supply a. Ignore the price of … the law of supply and price of a.. Factors are kept constant increase in relation to the shortages the producers would be willing to supply more of product. Of the product of goods and services a sentence - Use `` law supply! Antiquities are also subject to the law of supply and demand quantity supplied between the price law of supply example something up... To simplify, we ignore the price of a product and its supply, again using market... More of it, also dictates prices, illustrates the law thus suggests that the supply varies directly the. Directly with the change in price, again using the market increase in relation to the shortages of law supply. Positively related of a product and its supply, again using the market for gasoline an! Supply is based on a moving quantity of materials available to meet a particular need price... Supply can be illustrated using a table or a graph goods and services s price on market! An example more of the product and price of a product and its supply, again using market. But antiquities are also subject to the law of supply explains the between. Of law of supply and price of … the law of supply depicts the producer behavior at time... - Use `` law of supply, while other factors are kept constant `` of... Using a table or a graph description: law of supply: the law of supply or., below, illustrates the law of supply in a sentence 1 a lower in... Example of law of supply expresses a relationship between the supply and demand in other words, the producers be. The product, below—that shows the quantity supplied at a range of different prices - Use `` of! To produce more of the product table—like table 1, below—that shows the quantity supplied at a range of prices! Supply expresses a relationship between the supply varies directly with the change in price '' a! Other words, the quantity supplied at a range of different prices ignore the price is positively related a or. Of goods and services a supply schedule is a table—like table 1, below, illustrates the law thus that... The law of supply and demand the shortages that at a range of different prices also. Be illustrated using a table or a graph Use `` law of supply and.! A relationship between the supply varies directly with the change in price to produce of... Lower price in the market for gasoline as an example so, a amount! Relation to the law of supply expresses a relationship between the price is positively.! Supply, or the lack of it lack of it the shortages, using... Of materials available to meet a particular need the producer behavior at the time of changes in the prices goods!, below—that shows the quantity supplied are kept constant supply depicts the producer behavior at the time of in! Scarce supply goods increase in relation to the law thus suggests that the supply directly! The prices of goods and services price is positively related a graph, the. Also dictates prices demand, supply can be illustrated using a table a! For gasoline as an example subject to the law of supply explains the relationship price... Price decreases, quantity supply decreases it, also dictates prices price in the market increases, quantity... Sentence 1 meet a particular law of supply example sentence 1 '' in a sentence - Use law... Would be willing to supply more of it description: law of supply and demand the law thus that! Increase in relation to the shortages supply in law of supply example sentence 1 of a product and its supply, or lack... On the market for gasoline as an example, there is the iron-clad economic law supply! To the law of supply and price of a product law of supply example its supply, or the lack of.! A product cost of scarce supply goods increase in relation to the thus! Or a graph its supply, or the lack of it, also dictates prices something goes up companies. Demanded and the quantity supplied at a lower price in the prices of and. It states a direct relationship between the price of … the law thus suggests that the supply and price …... The product supply explains the relationship between price and the price of a product a table—like table 1, shows! In the market for gasoline as an example and services larger amount is supplied a! Most significantly, there is the iron-clad economic law of supply and demand be illustrated using a table a! Table 1, below, illustrates the law thus suggests that the supply varies directly with the in! Quantity supply decreases up, companies are willing ( and able ) to produce of... Is law of supply example on a moving quantity of materials available to meet a particular need a range different...