How Price Tempts Supply....

HOW PRICE INCREASES SUPPLY

Supply of any good or services is the amount that seller are willing to sell. There are many determinants of quantity supplied, but once again price plays a special role.If supply is low but demand high then the price will be high because the opportunity cost of buying the product or service has also increased with the price meaning that if people by that product or service they will likely have to sacrifice buying something else. But if supply is high but demand low then the price will be low because the opportunity cost has now decreased.

Supply and price are both linked to the demand of a product. The higher the demand the higher the consumer are willing to pay a price for a specific good and or service.

 

Price Tempts Supply. Supply is the willingness and ability to produce to offer the goods in the market for sale at various price. Unlike quantity demand,which shows the consumer desire, ability and will to purchase goods at various price.

There is no shift in supply caused due to increase or decrease in price, rather causes contraction(decrease quantity of supply) or extraction (increase quantity of supply) as shown in the as diagram.