(i) Individual supply schedule : Individual supply schedule shows the different quantities of a commodity that an individual firm or producer is prepared to sell at various prices. The law of supply can be explained with the help of individual supply schedule :
A hypothetical individual supply schedule of commodity X is given in Table. It is clear from the above individual supply schedule that more and more quantity of commodity X is being offered for sale by the firm as the price of the commodity increases. The firm is willing to supply 20 units of product X per month when the product price is Rs 2 per unit. When the price rises to Rs 3 per unit, it is now willing to sell 40 units of the commodity.
(ii) Supply curve is a graphical representation of a supply schedule. Individual supply curve reflects an individual supply schedule and market supply curve represents a market supply schedule. Figure has been graphed according to Table. Thus, curve SS reflects the individual supply curve.
Supply curve (as shown in Fig.) has a positive slope, i.e., it moves upward from left to right. It shows that more quantity will be supplied at higher prices and vice-versa. The various points on the supply curve (such as a, b, c, d & e) represent different possible price-quantity combinations. The positively sloping supply curve SS shows the direct relationship between price and quantity supplied.
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(iii) The phrase ‘other things being equal’ as used in the law of supply indicates its assumptions.
The main assumptions of the law are as follows :
• Price of other related goods should not change.
• Technology of production should not change.
• Cost of factors of production should remain the same.