The Law of Supply
What is the Law of Supply?
The Law of Supply states that all things being held equal, as the price increases the quantity supplied will increase and vice versa. This means that price and quantity supplied have a direct relationship to each other.
The Law of Supply is understood and used in all aspects of economics. From firms to markets and everything in between, everyone needs to understand the Law of Supply in order to apply this concept to their firm or market to maximize profits and outputs. The Law of Supply and Demand is the basic concept that needs to be understood in order to have a basis for other economic concepts.
The Law of Supply states that all things being held equal, as the price increases the quantity supplied will increase and vice versa. This means that price and quantity supplied have a direct relationship to each other.
The Law of Supply is understood and used in all aspects of economics. From firms to markets and everything in between, everyone needs to understand the Law of Supply in order to apply this concept to their firm or market to maximize profits and outputs. The Law of Supply and Demand is the basic concept that needs to be understood in order to have a basis for other economic concepts.
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The relationship/difference between the Law of Supply versus the Law of Demand
For the Law of Demand, the price and quantity demanded has an indirect relationship, which means that as price increases quantity demanded decreases. In the Law of Supply, the price and quantity supplied or a product or service has a direct relationship, which means when price increases quantity supplied increases.
For the Law of Demand, the price and quantity demanded has an indirect relationship, which means that as price increases quantity demanded decreases. In the Law of Supply, the price and quantity supplied or a product or service has a direct relationship, which means when price increases quantity supplied increases.
http://www.investopedia.com/terms/l/lawofsupply.asp
The Optimal Point of Production
The optimal point of production is when the Supply curve and Demand curve intersect. The intersection between the two curves is called the equilibrium. This is where the market operates to maximize profit and output.
The optimal point of production is when the Supply curve and Demand curve intersect. The intersection between the two curves is called the equilibrium. This is where the market operates to maximize profit and output.
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References:
"1,214,000 Businesses, Educators and Students Trust Our Tools for Building & Testing Knowledge!" ProProfs: Knowledge Management Software for Tests, Training, Flashcards, Knowledge Base. Web. 10 June 2015.
"Law Of Supply Definition | Investopedia." Investopedia. 19 Jan. 2005. Web. 10 June 2015.
"Law Of Supply Definition | Investopedia." Investopedia. 19 Jan. 2005. Web. 10 June 2015.