Question

State and explain the law of supply. What are the assumption of law?

Answer 1

Law of supply states that other things remaining constant, quantity supplied increases with increase in own price of a commodity and vice-versa.

Assumptions of the Law of Supply:-

1) there this no change in the price of the factors of production.

2) there this no change in the technique of production.

3) there this no change in the goal of the firm.

4) there this no change in the price of related goods.

5) there this no change in the business expectations.