Question

The law of supply is based on the assumption of ______.

Options

• Constant technology

• The commodity is divisible

• The prices of factors of production remain constant

• All the above

Answer 1

All the above

Explanation:

1. Constant technology: It assumes that the technology used in production remains unchanged. Technological advancements could increase supply at the same price level, violating the law of supply.

2. The commodity is divisible: It assumes that it can be divided into smaller units, allowing producers to adjust the quantity supplied in response to price changes.

3. The prices of factors of production remain constant: It assumes that the cost of inputs (labour, materials, etc.) does not change. If input prices change, it could affect the supply independent of the commodity's price.