law of supply
Production follows price
The law of supply is the economic principle that producers offer more of a good or service as its price rises, and less as the price falls.
Higher prices increase potential profit, motivating sellers to bring more to market: The law of supply explains why farmers plant more corn when prices spike.
It pairs with the law of demand to explain market behavior.
- demandForceful request or requirement
- scarcityInsufficiency of something needed
- priceMonetary value assigned
- price pointSet retail cost level
- marketVenue for trade
market forces · free market · equilibrium · invisible hand · surplus · buyer's market · shortage · seller's market · production · quantity · curve · economics · trade · sellers · goods · inventory · profit · competition
law of supplycommand economy
State-controlled economic system
price controls · planned economy · central planning · market failure · price ceiling
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