(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.
(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.
