The positively sloping supply curve is based upon
two important assumptions. Firstly producers or sellers aim to maximize profits
from production and sale of a commodity.
Secondly, as output of a commodity is expanded the
additional cost of producing an extra unit gees up due to diminishing returns
to variable factors.
As seen above, the quantity supplied of a commodity
occurs in response to the change in its price. At a higher price more quantity
of it is supplied and vice-versa.
Graphically:-
For above all these reasons the slope of the supply
curve is positive. In figure, SS’ serve denotes the supply curve, which shows
the positive relationship between price and quantity. For this reason, the
slope of the supply curve is upward and positive.
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