Level: SL and HL. Sections marked HL only are for Higher Level students.
Supply shows how much producers are willing and able to sell at each price. Together with demand, it determines market prices.
2.2.1 The law of supply
Definition
Supply is the quantity of a good or service that producers are willing and able to offer for sale at each possible price, in a given time period, ceteris paribus.
The law of supply states that there is a positive relationship between the price of a good and the quantity supplied, ceteris paribus: as price rises, quantity supplied rises.
A higher price makes production more profitable, so existing firms produce more and may switch resources away from other products. This is why the supply curve slopes upwards.
🔒 Also in the full notes
- 2.2.2 Assumptions underlying the law of supply (HL only)
- 2.2.3 The supply curve
- 2.2.4 Individual supply and market supply
- 2.2.5 Non-price determinants of supply
- 2.2.6 Movements along and shifts of the supply curve
- Exam practice: 5 questions with mark allocations
- 2 exemplar answers with full model answers and examiner commentary
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