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Manoj Bakshi
Asked: 2022-11-08T10:57:21+05:30 In:

State the reason for positive relationship between price and supply.

OR

There is a direct positive relationship between price and supply. Give reason.

State the reason for positive relationship between price and supply.

OR

There is a direct positive relationship between price and supply. Give reason.

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1 Answer

  1. There are two reasons for positive relationship between price and supply. They are:

    1. Sellers keep in mind the objective of profit maximization. So, when price rises they see the possibility of increasing profits. Thus, they supply more at a higher price.
    2. When price rises, those producers who were not willing to sell their stocks at lower price start selling the stocks.
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