The supply function represents the quantity of a certain good or service that producers are willing to offer in the market at different price levels. The law of supply states that there is a direct relationship between price and quantity supplied (ceteris paribus, hence, given that the rest remains equal). <u>Therefore, when the price charged increases, the amount that producers are willing to offer increases too. </u>
The elasticity of the supply function is the size of the quantity variation triggered by a price variation. If the amount supplied barely changes the suppply function is inelastic and if it changes appropiately after the price increase, then the function is elastic.
