Law of Supply

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The law of supply is straightforward: higher prices motivate producers to supply more. When the selling price of a product rises, producers find it more profitable to make and sell more of it. When prices fall, they cut back production.

Example: If wheat sells for $5/bushel, farmers plant 1 million acres. If the price doubles to $10/bushel, farming wheat becomes far more profitable — farmers plant 1.8 million acres, switching land from less profitable crops. The quantity supplied rises with price.

The supply curve slopes upward from left to right on a graph — as price (y-axis) increases, quantity supplied (x-axis) increases. Important caveat: the law holds "all else being equal" (ceteris paribus). Changes in input costs, technology, regulations, or natural disasters can shift the entire supply curve, overriding the price effect.

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