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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. Supply can be used to measure demand. In lack of customers over supply is occurred. An oversupply is often a loss, for that reason under supply generates a demand in the form of orders, or secondary sales at higher prices.

If ten people want to buy a pen, and there’s only one pen, the sale will be based on the level of demand for the pen. The supply function require more pens, which generates more production to meet demand.