What economic law states that, all else equal, quantity supplied increases as price increases? The law of supply states this relationship. It says that producers generally offer more units of a good or service when its price rises, assuming other relevant conditions remain unchanged.
A higher price can make additional production profitable. Firms may use more labor, machinery, materials, or operating time, while new suppliers may enter the market. For that reason, the conventional supply curve slopes upward, showing a positive relationship between a good’s own price and quantity supplied.
“All else equal” is essential. A change in wages, raw-material costs, technology, taxes, subsidies, producer expectations, weather, or the number of sellers can shift the entire supply curve. A movement along the curve reflects a change in the good’s own price; a shift reflects a change in another determinant.
The law of supply is often mixed up with the law of demand. Demand usually moves in the opposite direction: higher prices reduce quantity demanded. Supply also does not mean the total amount available; in a technical sense, quantity supplied refers to the amount sellers are willing and able to offer at a particular price and time.