Provide the law of supply definition.


The law of supply implies that when the price of goods and services increases, its factors being equal, the offer of the number of services and goods rises, too.


The law of supply works this way because when the price of products or services increases, the seller may want to maximize profit by offering more products. For instance, in a case of company creating video games, the organization will develop more of its products if their price increases and vice versa.

There are several factors affecting supply; the first one of them is the cost of production. The cost of production and the supply of an item are inversely related to one another. It means that when one of this factors is high, the other one is low.

The next factor affecting supply is natural conditions. It may not be evident, but climatic conditions can affect the supply of some products or services significantly.

The third component one should note is technology and its influence on supply. Technological advancements may increase the production of a product and, as a result, raise its supply. For example, the organization developing high-quality fertilizers may contribute to the increased production of crops.

Another factor affecting supply is transport conditions, meaning that improved transport facilities may increase the supply of products. Moreover, supply depends on governmental policies, too. For instance, a country’s industrial and fiscal policies may increase or decrease the volume of supplies.

Finally, the price of related goods contributes to the supply rate, as well. This point can be illustrated from the perspective of agriculture, in which the price of wheat may affect the supply of rise.

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