Question
Using diagram and schedule, explain the Law of Supply
✓
Answer
The Law of Supply states that other things being equal, quantity supplied increases with the increase in price and decreases with the decrease in price of a commodity. It can be explained with the help of following schedule and diagram:
The supply schedule shows the positive relationship between price and quantity supplied. This is in accordance with the Law of Supply. SS is the supply curve sloping upward. It shows a positive relationship between price and quantity supplied of a commodity. When price increases from ₹ 10 to ₹ 20, quantity supplied increases from 100 to 200 units.
|
S. No.
|
Price (₹)
|
Quantity supplied (units)
|
|
i.
|
10
|
100
|
|
ii.
|
20
|
200
|
|
iii.
|
30
|
300
|
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→| Price (₹) | $8$ | $6$ | $4$ | $2$ |
| Output (Units) | $1$ | $2$ | $3$ | $4$ |
| TR(₹) | - | - | - | - |
| MR (₹) | - | - | - | - |
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Total Output
(Units)
|
Total Cost (Rs)
|
|
0
|
120
|
|
1
|
180
|
|
2
|
200
|
|
3
|
210
|
|
4
|
230
|
|
5
|
270
|
|
6
|
360
|
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|
Output
|
1
|
2
|
3
|
|
MC
|
10
|
20
|
15
|
|
AVC (₹)
|
-
|
-
|
-
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