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Example of Law of Supply

The law of supply is based on a moving quantity of materials available to meet a particular need. Supply is the source of economic activity. Supply, or the lack of it, also dictates prices. Cost of scarce supply goods increase in relation to the shortages. Supply can be used to measure demand. Over supply results in lack of customers. An over supply is often a loss, for that reason. Under supply generates a demand in the form of orders, or secondary sales at higher prices.

Examples of Law of Supply:

If ten people want to buy an apple, and there's only one apple, the sale will be based on the level of demand for the apple. The supply function requires more apples, which generates more production to meet demand.