Supply and the Law of Supply

Last updated at October 5, 2026 by

Now, the other side of the market
  • So far, we looked at buyers like Srivalli. That was demand.
  • But mangoes reach the market only because someone sells them. This is the seller's side, called supply .
  • Let's go back to the same mango market and look at one seller, Seller A .
  • Let's see how much he offers for sale when the price of mangoes changes.
Example 1: How much does a seller offer at different prices?
  • The quantity Seller A offers for sale at different prices is:
Price of mango per kg Quantity supplied by Seller A
Rs 50 1 kg
Rs 100 2 kg
Rs 150 3 kg
  • As the price rises, the seller offers more mangoes.
Example 2: What if a seller wants to sell but does not have enough?
  • A small shopkeeper sees a good price and wants to sell 100 kg of mangoes.
  • But he has only 10 kg. He is willing, but not able, to sell 100 kg.
Example 3: What if a seller has mangoes but the price is too low?
  • A farmer has plenty of mangoes. But the market price is so low that he would make a loss.
  • So he does not send them to the market. He makes pickle at home instead. He is able, but not willing, to sell.
So what is supply?
  • Supply is the quantity of a product that sellers are willing and able to offer at a particular price.
What do "willing to sell" and "able to sell" mean?
  • Willing to sell - the seller wants to sell at that price.
  • Able to sell - the seller actually has that much to sell.
  • Supply exists only when both are there.
Case Willing? Able? Supply?
Seller A at Rs 150 Yes Yes Yes
Shopkeeper wanting to sell 100 kg Yes No No
Farmer at a loss-making price No Yes No
What is the Law of Supply?
  • When price rises, quantity supplied rises. When price falls, quantity supplied falls.
  • Price and quantity supplied move in the same direction. This is known as the Law of Supply .
  • Why does this happen? Higher prices mean more profit. More profit encourages producers to make more, and higher prices also attract new firms to the market.
The Law of Supply
Price rises
↑
Quantity supplied rises
↑
Price falls
↓
Quantity supplied falls
↓
↓
Price and quantity supplied move in the same direction
What are a supply schedule and a supply curve?
  • Supply schedule - a table showing the quantity supplied at different prices.
Price of mango per kg Quantity supplied by Seller A Point
Rs 50 1 kg A
Rs 100 2 kg B
Rs 150 3 kg C
  • Supply curve - the supply schedule drawn as a graph.
  • How to draw it:
    1. Draw two axes. Price goes on the y-axis, quantity on the x-axis.
    2. Plot point A at (Rs 50, 1 kg).
    3. Plot point B at (Rs 100, 2 kg).
    4. Plot point C at (Rs 150, 3 kg).
    5. Join the points. The line is the supply curve SS'.
  • SS' slopes upward . This shows that price and quantity supplied move together.
Supply and the Law of Supply - The Price Puzzle: What - [Teachoo] - Concepts
Drawing a seller's supply curve step by step
What is individual supply?
  • Individual supply is the quantity a particular seller offers at different prices. Seller A's table shows his individual supply.
What is market supply?
  • Market supply is the sum of all individual supplies .
Price Seller A Seller B Seller C Market supply (QS)
Rs 50 1 kg 3 kg 2 kg 6 kg
Rs 100 2 kg 4 kg 6 kg 12 kg
Rs 150 3 kg 7 kg 8 kg 18 kg
  • QS = A + B + C. Plotting market supply at each price gives the market supply curve SMSM'.
part 2 - Supply and the Law of Supply - Concepts - Chapter 9 - The Price Puzzle: What Drives the Market - Understanding Society India and Beyond Class 9
Seller A's supply curve and the market supply curve, on the same price scale (Fig 9.5)
What is the difference between individual supply and market supply?
Individual supply
Market supply
One seller's supply
All sellers' supply added together
At Rs 100: Seller A offers 2 kg
At Rs 100: A + B + C = 12 kg
Curve SS'
Curve SMSM'
What is the difference between the Law of Demand and the Law of Supply?
Law of Demand
Law of Supply
Price and quantity move in opposite directions
Price and quantity move in the same direction
Curve slopes downward
Curve slopes upward
How do demand and supply together decide price?
  • At the start of the mango season, supply is low, so mangoes are costly. In mid-season, supply increases, so prices fall.
Situation Price
Supply less than demand Rises
Supply more than demand Falls
  • This is what happened with the Goa flight ticket in the Introduction.
Test yourself
1. What is supply?
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The quantity of a product that sellers are willing and able to offer at a particular price.

2. A farmer has mangoes but will not sell them at a loss-making price. Is this supply?
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No. He is able but not willing to sell.

3. Fill in the blank: By the Law of Supply, price and quantity supplied move in the ______ direction.
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Same.

4. Give two reasons why sellers offer more at higher prices.
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Higher prices mean more profit, which encourages more output. They also attract new firms to the market.

5. At Rs 150, Sellers A, B and C offer 3 kg, 7 kg and 8 kg. What is the market supply?
Show answer Hide answer

18 kg.

📝 What Have We Learned
  • Supply is the quantity sellers are willing and able to offer at a price.
  • By the Law of Supply, price and quantity supplied move in the same direction, so the supply curve slopes upward.
  • Market supply is the sum of all individual supplies; when supply is less than demand prices rise, and when it is more, prices fall.
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CA Maninder Singh is a Chartered Accountant qualified since 2010 and an educator teaching since 2006. At Teachoo, he draws on his accounting and tax experience to explain Accounts, Income Tax and GST through step-by-step lessons and practical examples.

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