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The law of supply is defined as:

“When the price of a product increase the supply also increase” The relation of price and supply is directly proportion. The price is function of supply.


There is a difference between supply and stock. If the products and placed in warehouse it is known as stock. If the products are brought forward to the market then it is known as supply. There is other thing which is remaining the same then he law is applied.


Assumption: the assumptions are following: Production: The productions of goods remained the same. Then the law is applied. Production Techniques: it should also remain same because if techniques changed then the supply change without the effect of price.


Future Expectations: there should not be future expectation that the price may change. It also affects the supply without the effect of present price. Distribution: There should not be flood drought and earth quake because it effect the supply of goods without the effect of price.


Substitution: There should not be increase in the supply of substitution goods. The importance of law of supply is that it is used in the supply maintaining of goods. That’s a law of Supply. 

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