1. Supply (Economics)
In economics, supply is the amounts of some product producers are willing and able to
sell at a given price all other factors being held constant. Usually, supply is plotted as a supply
curve showing the relationship of price to the amount of product businesses are willing to sell.
Law of Supply: If Price increase, Demand will also increase and if Price decrease, Demand
will also decrease.
Supply Schedule
A supply schedule is a table which shows how much one or more firms will be willing to
supply at particular prices. The supply schedule shows the quantity of goods that a supplier
would be willing and able to sell at specific prices under the existing circumstances. Some of the
more important factors affecting supply are the goods own price, the price of related goods,
production costs, technology and expectations of sellers.
Factors affecting supply
Goods own price: The basic supply relationship is between the price of a good and the quantity
supplied. Although there is no "Law of Supply", generally, the relationship is positive or direct
meaning that an increase in price will induce an increase in the quantity supplied.
Price of related goods: For purposes of supply analysis related goods refer to goods from which
inputs are derived to be used in the production of the primary good. For example, Spam is made
from pork shoulders and ham. Both are derived from Pigs. Therefore pigs would be considered a
related good to Spam. In this case the relationship would be negative or inverse. If the price of
pigs goes up the supply of Spam would decrease (supply curve shifts up or in) because the cost
of production would have increased.
Conditions of production: The most significant factor here is the state of technology. If there is a
technological advancement in one's good's production, the supply increases. Other variables may
also affect production conditions. For instance, for agricultural goods, weather is crucial for it
may affect the production outputs.
Expectations: Sellers expectations concerning future market condition can directly affect
supply. If the seller believes that the demand for his product will sharply increase in the
foreseeable future the firm owner may immediately increase production in anticipation of future

2. price increases. The supply curve would shift out. Note that the outward shift of the supply curve
may create the exact condition the seller anticipated, excess demand.
Price of inputs: Inputs include land, labor, energy and raw materials. If the price of inputs
increases the supply curve will shift in as sellers are less willing or able to sell goods at existing
prices. For example, if the price of electricity increased a seller may reduce his supply because of
the increased costs of production. The seller is likely to raise the price the seller charges for each
unit of output.
Number of suppliers: The market supply curve is the horizontal summation of the individual
supply curves. As more firms enter the industry the market supply curve will shift out driving
down prices.
Government policies and regulations: Government intervention can have a significant effect on
supply. Government intervention can take many forms including environmental and health
regulations, hour and wage laws, taxes, electrical and natural gas rates and zoning and land use
regulations.
Supply Function and Equation
The supply function is the mathematical expression of the relationship between supply
and those factors that affect the willingness and ability of a supplier to offer goods for sale. For
example, is a supply function where equals price of the good
equals the price of related goods and equals the number of producers. The vertical bar means
that the variables to the right are being held constant. The supply equation is the explicit
mathematical expression of the functional relationship. For example,
. is y-intercept it is the repository of all non-specified
factors that affect supply for the product. Is the price of the own good. The coefficient is
positive following the general rule that price and quantity supplied are directly related. is
the price of a related good. Typically the relationship is positive because the good is an input or a
source of inputs.

3. Supply Curve
The relationship of price and quantity supplied can be exhibited graphically as the supply
curve. The curve is generally positively sloped. The curve depicts the relationship between two
variables only; price and quantity supplied. All other factors affecting supply are held constant.
However, these factors are part of the supply curve and are present in the intercept or constant
term.
Production (Economics)
In economics, production is the act of creating output, a good or service which
has value and contributes to the utility of individuals. The act may or may not include factors of
production other than labor. Any effort directed toward the realization of a desired product or
service is a "productive" effort and the performance of such act is production. The relation
between the amount of inputs used in production and the resulting amount of output is called
the production function.
Factors of Production
In economics, factors of production are the inputs to the production process. Finished
goods are the output.
Input determines the quantity of output i.e. output depends upon input. Input is the
starting point and output is the end point of production process and such input-output
relationship is called a production function. All factors of production like land, labor, capital and
technology are required in combination at a time to produce a commodity. In economics,
production means creation or an addition of utility. Factors of production (or productive 'inputs'
or 'resources') are any commodities or services used to produce goods or services
'Factors of production' may also refer specifically to the 'primary factors', which
are stocks including land, labor (the ability to work), and capital goods applied to production.
Materials and energy are considered secondary factors in classical economics because they are

4. obtained from land, labor and capital. The primary factors facilitate production but neither
become part of the product (as with raw materials) nor become significantly transformed by the
production process (as with fuel used to power machinery). 'Land' includes not only the site of
production but natural resources above or below the soil. The factor land may, however, for
simplification purposes are merged with capital in some case (due to land being of little
importance in the service sector and manufacturing). Recent usage has distinguished human
capital (the stock of knowledge in the labor force) from labor. Entrepreneurship is also
sometimes considered a factor of production. Sometimes the overall state of technology is
described as a factor of production. The number and definition of factors varies, depending on
theoretical purpose, empirical emphasis, or school of economics.
Production Function
In economics, a production function relates physical output of a production process to
physical inputs or factors of production. The production function is one of the key concepts
of mainstream neoclassical theories, used to define marginal product and to distinguish allocate
efficiency, the defining focus of economics. The primary purpose of the production function is to
address allocate efficiency in the use of factor inputs in production and the resulting distribution
of income to those factors, while abstracting away from the technological problems of achieving
technical efficiency, as an engineer or professional manager might understand it.
In macroeconomics, aggregate production functions are estimated to create a framework
in which to distinguish how much of economic growth to attribute to changes in factor allocation
(e.g. the accumulation of capital) and how much to attribute to advancing technology. Some non-
mainstream economists, however, reject the very concept of an aggregate production function.