The Law of Supply
Supply
AO2
Syllabus requirement
The direct relationship between price and quantity supplied, assuming ceteris paribus.
Assessment objectives
AO2 Application and Analysis
Summary
The law of supply explains that firms will offer a larger quantity of a good for sale when its price rises, holding other factors constant. This happens because higher prices increase potential profit margins, which encourages firms to supply more. The relationship is shown by an upward-sloping supply curve and holds only if non-price supply determinants do not change.
