Question

Explain the concept of Law of supply and its applicability in oil industries.

Answer 1

Law of supply is nothing but the concept that States the relationship between price and quantity supplied where the price increases the quantity supplied also increases and vice versa and it is also applicable in the oil industry where if the global demand for oil is very high then the prices would also be very high as a result of which you will get to produce more or supply more in order to meet the demand conditions and this is in line with the law of supply because at high price you will supply more or the quantity supplied is high and similarly during a recession the price will be low because the demand will be low and this allows you to supply less or the quantity supplied is reduced and this is also inline with that of law of supply all in all