2. The Meaning of Supply
Supply refers to the
relationship between the price
of a commodity and the
quantity of the commodity that
producers wish to make and sell
per period of time.

3. Law of Supply
The Law of Supply states that, other
things being equal, the quantity
supplied of a good per period of
time rises when the price of the
good rises and the quantity
supplied per period of time falls
when the price falls.

4. Table 16.1 Demand Schedule for Puto
Points Price per Pack (P) Quantity Supplied of Puto
(Packs)
A 50 40
B 40 30
C 30 20
D 20 10
E 10 5

5. The Supply Schedule
The Supply Schedule is a table that
shows the relationship between the
price of a good or service and the
quantity supplied. The previous table
shows that changes in the price of puto
are accompanied by changes in
quantity supplied of puto.

6. The Supply Curve
The supply curve is a graph
of the relationship
between the price of a
good or service and the
quantity supplied.

7. Supply Curve for Puto
P
S
50
E
40
D
30
C
20
B
10
A
0 S Q
5 10 20 30 40
QUANTITY OF PUTO (PACKS)

8. NON-PRICE FACTORS AFFECTING
SUPPLY
There are factors other than the price of a commodity
that affect the supply of that commodity. These factors
include:
the number of producers,
change in the price of factors of production,
price related products,
state of technology, and
expectations of the future.

9. Change in the Number of
Producers
The number of producers affects the
supply. If a toothpaste company
stops production, there will be a
decrease in the supply of
toothpaste. This will shift the
supply curve to the left.

10. Change in the Price of Factors of
Production
Land, labor and capital are used as inputs in the
production of goods and services. Suppose wages
paid to labor increased. This will increase the cost
of production, causing the business firm to
produce less at any given price. In this case, there
will be a decrease in supply. A decrease in the
supply of goods brought about by this activity will
result in the leftward shift of the supply curve for
that product.

11. Change in the Price of Related
Products
A change in the price of related products
will affect supply. A rise in the price of
tilapia may convince the owners of fish
farms engaged in mudfish production
to shift to tilapia production. If that
happens, there will be an increase in
the supply of tilapia.

12. Technological Improvement
Increased productivity lowers the cost of
production. One of the ways in which
productivity could be increased is through
improvements in technology. An example
would be the use of robots in speeding up,
and lowering the cost of production.
Improvements in technology will increase
supply. Here, the supply curve will shift to
the right of the earlier supply curve.

13. Expectations
The amount of goods and services available
today may depend on the business firms’
expectations of the future. Suppose a
gasoline dealer expects the price of gasoline
to rise in the future. The gasoline dealer will
hold back his supply. When this happens,
there will be a decrease in the supply of
gasoline and the supply curve of this
product will shift to the left.