What is the law of the sentence?

Economists have long established that there is a relationship between price and the supplied goods on the market - this is the law of supply. He expresses it for the manufacturer, he plays an important role, as it allows to determine what quantity of products to produce at the current price.

What is a market offer?

Commodity producers are guided by the needs of potential buyers. Their combination allows to ensure satisfaction of effective demand, forming market supply. The law expresses in this case the desire and ability of sellers to supply products at each price in a certain period of time.

The ability to provide goods relates to the use of limited resources, so it is impossible to meet the needs of the entire population, since they are limitless. The volume of supply depends on the quantity of products produced, but these values ​​do not always coincide. A certain part of the manufactured goods is consumed directly in the enterprise.In addition, often there are losses in the implementation of transportation and storage.

Expression of dependencies in the sentence law

The number of products that the company is able to produce is influenced by various factors:

  • the price of the product itself;
  • cost of resources used;
  • technological capabilities;
  • taxes and subsidies;
  • company goals;
  • manufacturers expectations.

It turns out that the sentence is a function of several variables. However, producers should be interested in the nature of dependencies directly between the price of products and the value of supplies.

What exactly is the law of the sentence?

For the seller, the price is an incentive to sell products on the market. For the consumer, high cost is a deterrent, because in such a situation it will be possible to purchase less quantity of goods. It is the price increase that contributes to obtaining additional profit for the manufacturer, providing an opportunity to expand existing opportunities.

The law of market supply is based on two parameters.

It is necessary to understand that the law of the proposal expresses a direct relationship between the price and the quantity of the products provided during a certain time interval.Manufacturers are trying to make and deliver for sale a larger volume of goods at high cost.

Tabular expression

In order to visually show what dependence the law of market supply expresses, you can resort to using a regular table. For this we take arbitrary numbers. In one line will be reflected the price of the goods, and in the other - the value of the proposal. The table will look something like this.

Product price

10

12

14

16

18

The value of the sentence

0

1

2

3

4

The data presented in the cells show that at the lowest cost there are no manufacturers willing to manufacture and sell a certain product. With the increase in prices, their number gradually increases, that is, the law of the proposal is fully respected.

The increase in the value of the proposal

Graphic expression

Most often, the law of the sentence is expressed by the coordinate system. The result is a graph reflecting quantitative indicators using the curve. The price is deposited directly on the vertical axis, and the value of the proposal - on the horizontal.

After compiling it, you can see that the resulting line has a certain slope upwards.This suggests that the parameters presented change in the same direction. As the price rises, so does the supply (and vice versa). It also demonstrates the operation of the law.

The expression method in the form of an equation

Another option that expresses the dependence of the law of the proposition is to construct an equation. With a linear function, the view will be as follows:

P = a + b * q, where a and b are some given parameters.

Patterns of change in price and value of the offer

As a rule, the letter symbol "a" denotes the place where the supply line intersects directly with the axis of ordinates. This is the lowest price at which there are no manufacturers willing to engage in the manufacture of this product. As for the parameter "b", it determines the slope of the curve relative to the horizontal axis. With its increase, the slope of the line becomes steeper.

Possible curve shifts

The impact of some factors directly on the proposal is expressed in the shift of the curve. It can move downwards and to the right as it increases, and also to the left and upwards - as it decreases. The growth process suggests that manufacturers provide more products at the same price than before.In the case of a decline, everything happens the other way around.

Of particular importance in the displacement of the curve are changes in the costs of manufacturers. The line itself in this case represents these costs. A positive slope indicates that each subsequent unit of goods implies an increase in expenditures of a certain amount.

The relationship between the magnitude of the proposal and prices

This can be clearly understood by the example of oil production. Suppose there are only three fields in which it is possible to extract one barrel from the depths. The costs of companies are different.

Field

Expenditures in dollars

USA

10

Russia

20

Saudi Arabia

30

If the world price fell below 10 dollars, no country would be engaged in oil production. With the increase in cost, more hydrocarbons would appear on the market, as other manufacturers would begin to connect. At a price of more than $ 30, three barrels of oil would have entered the market. As costs increase for all mining companies, the supply curve will shift. It will move exactly the amount of costs. The opposite situation will be observed if they are provided with state subsidies.

Final part

It became approximately clear what the law of the sentence expresses. However, with pronounced features of monopoly, its action may be somewhat distorted. In the face of rising prices due to inflation, suppliers and manufacturers are tempted to reduce the supply to some degree. The depreciation of funds allows you to cover the existing losses in the income of the seller. It is for this reason that profits can increase even with a decrease in supply.

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