Q.State the Law of Supply. What are the main reasons for a positive relationship between price and quantity supplied?

The Law of Supply describes how quantity supplied reacts to price alone, holding everything else fixed.

The Law of Supply states that, other things remaining constant (ceteris paribus), the quantity supplied of a commodity is directly related to its price — a rise in price leads to a rise in quantity supplied, and a fall in price leads to a fall in quantity supplied.

Reasons for the positive (direct) relationship:

1. Profit motive. A higher price widens the margin over the existing cost of production, giving producers a direct financial incentive to raise output — by fuller use of existing capacity, and by drawing in new firms.
2. Rising marginal cost. Producing additional units in the short run typically costs more per unit (diminishing returns, as at least one input is fixed), so producers are willing to supply those costlier extra units only when the price rises enough to cover the higher marginal cost.

Both reasons operate together: profit-seeking behaviour explains WHY producers want to supply more at a higher price, and rising marginal cost explains WHY they need the higher price to be willing to do so.

Stating the law without the ceteris paribus qualification — without it, a real-world case where price rises but supply actually falls (e.g. a bad harvest that raises price while ALSO cutting the physical crop available) is wrongly read as 'disproving' the law, when in fact a separate determinant (weather/output) changed at the same time.