A Quick overview of the Law of Supply

Introduction Law of Supply

The law of supply states there is a direct connection between price and quantity. It is the fundamental theory of economical principal. According to this theory, keeping other factors constant, an increase in price results in increase in quantity supplied. Thus, quantities respond in the same direction as price changes. Assignments based on law os supply are often needs to be submitted by students of economics. BookMyEssay is a premium academic writing institute that offers the law of supply assignment help.

In other words the relation between price and quantity gives an upward slope of the supply curve thus showing a positive relationship. But when the production in teases, unit price goes down and the demand goes down the unit price increases. This shows that the supply curve for mass produced goods is a downward slope.

In general, law of supply describes the behaviour of the seller in offering stock of the commodity for sale in relation to the varying prices. It has been found that the sellers are usually ready to supply more with rising prices.

Mathematical Definition

The mathematical expression for law of supply is : (p - p')(y - y') >= 0 Where, y is the amount supplied at the price p, and y' is the amount supplied at some other price p' Thus, if p>p' the y>y'

Assumptions Underlying Law of Supply

While asking for law of supply assignment help, be rest assured that the experts at BookMyEssay are aware of all the assumptions of law of supply and will add it to the assignment delivered to you. Important assumptions are as follows :

  1. No change in income: There should not be any change in the income of purchaser or seller. It is very important assumption and be kept in mind.
  1. No change in technique of production: This condition is essential for the cost to remain the same. With improved technique of production, if the cost is reduced, the seller would supply more even at falling prices. Experts at BookMyEssay, give assignment writing help taking into consideration that the technique of production doesnot change as per law of supply.
  1. No change in transport cost: Assumed that that the transport facilities or transportation cost remains the same. A reduced transport cost implies reduction in cost of production which means more supply at a lower price.
  1. No change in cost of production: It is assumed that the price of the product changes but the cost of production doesnot change. If the cost of production increases with product price, seller will not find it worth while to produce more and supply more. Thus law of supply is valid only when the cost of production remains same. The assignments delivered to students related to law of supply has all the important information.
  1. Fixed scale of production: It is assumed that the scale of production is constant. If there is a changing scale of production the level of supply will change, irrespective of the changes in the price of the product.
  1. No speculation: It is assumed that the seller doesnot speculate the future changes in the price of the product.
  1. No change in Government policies: The policies by government are an important factor that affect law of supply. Policies related to taxation, trading etc. should remain same.

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