Q:

What does the law of supply state?

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Quick Answer

In economics, the law of supply states that, considering all aspects equal, the price of a marketed good or service is directly proportional to the quantity supplied. As the price increases, the quantity supplied also increases. Conversely, a decrease in the price results in a decrease in the quantity.

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Full Answer

The law of supply, along with the law of demand, comprise the two fundamental laws in economics. Supply refers to the total amount of produced commodities or services, while demand pertains to the quantity of certain products or services desired by consumers.The law of supply sets constraints on the buyers, while the law of demand restricts the producers.

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Related Questions

  • Q:

    What is the "law of supply"?

    A:

    The law of supply is an economic concept stating that the price and supply of a good or service are directly elastic to each other. When the price of a good or service increases, the supply of that particular good or service invariably increases, and vice versa. The law of supply states that as price rises, suppliers seek to maximize profits by increasing the quantity supplied.

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  • Q:

    Who is the father of economics?

    A:

    Adam Smith is often considered the father of economics. Much of what is considered the standard of market theory was written by him over the course of two books, the "Theory of Moral Sentiments" and "An Inquiry into the Nature and Causes of the Wealth of Nations."

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  • Q:

    How is economics like a science?

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    According to the Business Insider, economics is like a science because economists use an empirical or scientific method to solve problems. In addition, theories in economics can be tested. The Business Insider adds that economists have access to big data, which allows them to isolate and establish the causal relationships of a scientific inquiry.

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  • Q:

    What is the origin of economics?

    A:

    Investopedia explains that the origin of economic thought lies with a man named Adam Smith who was heavily influenced by French writers and philosophers. Smith developed the discipline of economics as an alternative to French mercantilism, which was an easily exploited system that benefited the wealthy at the expense of the common classes. Other important economic thinkers include Karl Marx, Milton Friedman and John Maynard Keynes.

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