The Law of Supply

The Law of Supply states that, all else being equal, as the price of a good or service increases, producers are willing to supply more of it. Conversely, if the price decreases, they tend to supply less. This relationship exists because higher prices can cover the costs of production and provide incentives for producers to increase output, while lower prices may not justify producing large quantities. The law helps explain how markets adjust to changes in prices and how supply responds to economic conditions, balancing overall market availability with consumer demand.