As we shall see during our study of microeconomics, the conditions under which firms would behave as price takers, are quite strong and rare in the real world. Indeed, these conditions are so special, that we refer to them as perfect competition.

Nevertheless, even though most real world firms aren't price takers, the intuition behind the law of supply turns out to be both valuable and useful in understanding market adjustments; regardless of whether or not firms are price takers.

The reason for upward sloping supply curves or the law of supply (after all, they are the same thing), is rooted in the idea of opportunity costs. The more valuable a firm's output (in terms of price or revenue), the more the firm will be willing to forgo other activities in favor of producing that output; just as the law of supply suggests.

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