The law of supply is a fundamental principle in economics that explains the relationship between the price of a commodity and the quantity producers are willing to offer for sale. The law states that, all other factors remaining constant, an increase in the price of a commodity leads to an increase in the quantity supplied, while a decrease in price results in a decrease in the quantity supplied.

When prices are high, producers are motivated to supply more goods because higher prices increase profit margins. This encourages firms to expand production, employ more resources, and bring more goods into the market. On the other hand, when prices are low, producers earn less profit, making production less attractive, which causes them to reduce the quantity supplied.

The phrase “all other factors remaining constant” means that factors such as technology, cost of production, government policies, and the number of sellers do not change. This assumption helps economists focus solely on the effect of price changes on supply. The law of supply therefore shows a direct relationship between price and quantity supplied and is commonly illustrated with an upward-sloping supply curve.

A supply curve is a graphical representation that shows the relationship between the price of a commodity and the quantity supplied by producers. It illustrates how much of a good producers are willing and able to offer for sale at different price levels within a given period of time.

The supply curve is drawn on a graph with price measured on the vertical axis (Y-axis) and quantity supplied measured on the horizontal axis (X-axis). Each point on the curve represents a specific price and the corresponding quantity supplied at that price.

The phrase “within a given period of time” is important because supply conditions can change over time due to factors such as technology, cost of production, or government policies. By keeping the time period constant, the supply curve clearly shows the relationship between price and quantity supplied without interference from other factors.

In most cases, the supply curve slopes upward from left to right, reflecting the law of supply. This upward slope indicates that higher prices encourage producers to supply more goods, while lower prices lead to a reduction in quantity supplied.

SPQT —
S = Supply curve
P = Price (vertical axis)
Q = Quantity supplied (horizontal axis)
T = Time period remains constant

Graph Memory Tip:
“P goes up the page, Q goes across the page — all within one Time.”

Quick Recall Chant:
“Supply curve shows price and quantity supplied, drawn on a graph, within a given period of time.”

Drag each concept to the correct description.

• A supply curve is a graphical representation showing the relationship between price and quantity supplied of a commodity.
• Price is measured on the vertical axis, while quantity supplied is measured on the horizontal axis.
• The law of supply operates within a given period of time, assuming other factors remain constant (ceteris paribus).
• The supply curve generally slopes upward from left to right, indicating a direct relationship between price and quantity supplied.
• Higher prices encourage producers to supply more, while lower prices reduce the quantity supplied.
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