How does a price change affect quantity supplied?

A price change directly affects the quantity supplied; as the price increases, the quantity supplied also increases.

In economics, the relationship between the price of a good or service and the quantity that producers are willing and able to sell is known as the law of supply. This law states that, all else being equal, an increase in price results in an increase in the quantity supplied. This is because higher prices give producers an incentive to supply more as they can earn higher revenues.

For instance, if the price of apples rises, apple growers will have a greater incentive to sell more apples. They might employ more workers, use more fertilisers, or invest in new machinery to increase their production. This is because the higher price means they can cover the costs of these inputs and still make a profit. Conversely, if the price of apples falls, growers will cut back on production as it may no longer be profitable to produce as many apples.

This relationship can be represented graphically with the supply curve, which is typically upward sloping. The vertical axis represents the price of the good or service, while the horizontal axis represents the quantity supplied. As you move up the curve, the quantity supplied increases, reflecting the higher price.

However, it's important to note that this relationship assumes that all other factors remain constant. In reality, other factors such as production costs, technology, and expectations about future prices can also affect the quantity supplied. For example, if the cost of fertilisers rises, apple growers may reduce their supply even if the price of apples remains high. Similarly, if growers expect the price of apples to rise in the future, they may hold back some of their current supply to sell later at the higher price.

In conclusion, while the price is a key determinant of the quantity supplied, it's not the only factor. Producers take into account a range of factors when deciding how much to supply, and changes in these factors can shift the supply curve, leading to changes in the quantity supplied at every price level.