Question

List two assumptions of this Law of Supply.

Answer 1

The phrase 'other things being equal' as used in the law of supply indicates towards its assumptions. The law is based on the following assumptions:

1. There is no change in the price of related goods.
2. There is no change in the state of technology.
3. There is no change in the goals of the firms.
4. There is no change in the prices of factors of production.
5. There is no expectation of change in price in near future.