Presentationon- Supply Theory By- ShubhamSinghal Manish Gupta
What is Supply? Qty. of product that a producer is willing & able to supply onto market at a given price in a given time period. In other words, Supply of a good or product is a qty. which a seller is ready to sell in the market at certain price at a certain period.
Demand Vs. Supply Demand shows, how much of a product consumers are willing to purchase, at different price points, during a certain time period. As, price of product increases its demand decreases & vice-versa. Demand explains Consumers side of purchasing power. Demand curve slopes downward. Supply shows us the quantities that suppliers are willing to offer at various prices. As, Price increases supply of the product also increases & vice-versa. Supply relates to the producer's desire to make a profit. Supply curve slopes upward.
For e.g.Lets take a simple example, say for Gasoline Law of Demand Law of Supply
Supply vs. Stock Stock- It is the qty. of the product which is available in the market at a certain time. Supply- It is part of stock which a seller is ready to sell at the price offered in the market. For e.g. If a farmer has 100 Quintals of rice with him, but if considers only 20 quintals of rice appropriate for selling at given price, then here stock is 100 Quintals while Supply of rice is only 20 Quintals.
Factors affecting Supply of a Commodity-: 1) Price of a Product2) Production Cost3) Substitute Prices4) Prestige of Product5) Role of Technology6) Transportation & Comm.7) Taxation Policies
1)Price of Product-:Directly proportional to Supply2)Production Cost-:Inversely proportional to supply3)Substitute Prices-:Supply of a particular product decreases if price of its substitutes increases.4)Prestige of the Product-:supply of product in market, is not only increased to gain more profit, but to establish its prestige in the market.5)Technology-:Technical Knowledge of a product will result in efficient production, hence will increase supply.6)Transportation & Communication-:Better these facilities , better the supply.7)Taxation Policy-:Heavy taxes discourage production while liberal taxes encourages production.