law of supply


An economic theory which states that a company faced with constant demand will be able to raise prices inversely to shrinking available supply; conversely, the company may lower prices inversely to increased supply. If demand fluctuates, the corresponding price of supply will move in the opposite direction to the demand. Opposite of law of demand.

Use law of supply in a sentence

  • If you want to be able to charge more for your product you may be able to decrease supply using the law of supply so the demand raises.

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  • In compliance to the economic law of supply, farmers became more willing to supply more tomatoes than potatoes when the price of tomatoes increased while the price of the other decreased.

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  • The law of supply will sometimes dictate that you need to lower your supply so that people think your product is more rare.

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