The document discusses the law of supply, which states that, all other things held constant, as the price of a good increases, the quantity supplied of that good also increases, and vice versa. It provides definitions and assumptions of the law, including that production costs, technology, climate, prices of substitutes, and natural resources remain unchanged. An example is given showing how the quantity supplied of wheat by a farmer increases from 5 to 60 bushels as the price per bushel rises from $1 to $5. The concepts of supply movements and shifts are explained, along with various determinants that can cause a supply shift, such as changes in input prices, technology, transportation, and policies.

1. Law Of Supply
Group Members
1. Muhammad Samran
BBA.12.o3
2. Mir Haris Elahi BBA.12.13

2. Law of Supply
Introduction:
It is observed in markets that when high price of
goods are offered to sellers. They increase the
supply of those goods and when price level of
those goods decreases, the seller decreases the
supply of those goods. This behaviour of seller is
known as Law of supply.

3. Defination:
• “Other things remaining same, when price of a
commodity increases its quantity supplied increases
and if price of a commodity decreases, quantity
supplied also decreases”.
• There exist a positive and direct relationship
between price and quantity supplied of a
commodity. Following terminologies are used while
expressing law of supply:
• Quantity supplied=Qs
• Price=P

4. Assumptions
• Following are assumptions of law of supply
which are held constant while describing law of
supply.
1. No Change in cost of Production
2. No Change in technology
3. No Change in climate
4. No Change in Price of Substitutes
5. No Change in Natural Resources

5. Explaination
• Let,s see this example to understand law of
supply. Assume that you are a farmer and you
are producing wheat. If price of per bushel of
wheat is $1 you will only produce 5 bushels of
wheat, if price increases to $2 you will increase
your supply to 20 bushels, And if price again
increases to $3 you will produce 35 bushels, And
at $4 you will produce 50 bushels And if price
are at their top i.e $5 then you will produce 60
bushels. You can see the table below.

6. Explaination
Quantity Supplied (lattes per month)
Price(perlatte)
P Qs
$5
4
3
2
1
60
50
35
20
5
P
Q
S
10 20 30 40 50 60 70

7. Change in Supply
• There are two type of changes in Supply. The one is
movement of supply or extension and
contraction of supply and other is shift in
supply.
• Movement of supply:
Other things remaining same, All change in quantity
supplied resulting from the change in price factor, is
called the movement of supply. If supply curve
moves on left side then it means that supply
decreases and if curve moves toward right side it
shows that supply increases.

8. • Let consider the above example
when price moves from $1 to 2,3,4,5
Quantity Supplied increases from
5kg to 20,35,50&60Kg this is known
as extension of supply and if we see
this phenomena from reverse side
when price is decreasing from 5$ to
1$ Quantity supplied is also
decreasing from 60 to 5Kg. This is
known as Contraction of supply. Let
see it clearly through diagram.

9. 1
2
3
4
5
0
1
2
3
4
5
6
5 20 35 50 60
Price
Chart Title

10. Shift in Supply:
• There are many factors that can be a cause of
change in supply of a commodity while price
remain,s constant. Then change in supply of a
commodity due to change in different factors at
constant price is called shift in supply.
• If supply curve moves upward it means supply
decreases.
• If supply curve moves downward it means
supply increases

11. Diagram:

12. Cases of rise and fall in supply or determinant of
supply
• We assume some factors constant while
describing law of supply, those factors are
known as determinants of supply. Some of them
are described below.
1) Change in factors prices.
2) Change in Technology.
3) Means of transport and
communications.
4) Scientific Development.

13. 5) Union of Sellers.
6) Trade Policy.
7) Industrial Expansion.
8) Change in price of a Subsitute.

14. Thanks Every One
• For Attending our Presentation.
• And a very Special thanks to our Dear Professor
Syed Zagham Abbas Who Taught us through out
the semester in the easiest way as possible. 