The law supply express relationship between quantity supplied and its price.

The law states that there is a direct relation between quantity supplied and Price. With the increase in price, the quantity supplied increases and vice versa

The law can also be stated as increase in price is followed by an increase in supply and decrease in price followed decrease in supply provided the other things remains constant.

Explanation

The Schedule and Diagram both present same conditions.

When price of a commodity is Rs.8 per unit then the quantity supplied is 4 units. As the price rise the quantity supply goes up with the result that quantity supplied is the highest when price is highest.

Assumptions of the law:

Cost of Production

For the application of Law of Supply it is assumed that cost of production remains constant

Price of Capital Goods

It is also assumed that price of capital goods remains constant

Production Technique

For the application of law it is also assumed that techniques and producers of production remain constant.