Q:

What does the law of supply state?

A:

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:

    What is pricing policy in economics?

    A:

    Pricing policy refers to the way a company sets the prices of its services and products basing on their value, demand, cost of production and the market competition. Pricing policy is essential for all companies as it provides a guideline for creating profits and areas that bring in losses. Pricing policy goes hand in hand with pricing strategy.

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  • Q:

    What are the branches of economics?

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    The two major branches of economics are microeconomics and macroeconomics. Microeconomics deals largely with the decision-making behavior of individual consumers and firms in markets, while macroeconomics focuses largely on the aggregated behavior of all consumers and firms in an economy.

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  • Q:

    What is demand in economics?

    A:

    In economics, demand is the quantity of goods or services that consumers are able and willing to buy at a given price at a particular time. The law of demand provides that, if all other market factors remain constant, the demand for goods and services increases as their price decreases.

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