The document discusses the concepts of supply and the law of supply. It provides definitions and explanations with a diagram and example. The law of supply states that quantity supplied rises as price increases, as producers seek to maximize profits. The diagram shows supply increasing from Q1 to Q3 as price rises from P1 to P3. Determinants of supply that are discussed include selling price, number of sellers, price of raw materials, future expectations, and technology. An example is not explicitly provided.

1. GANDHINAGAR INSTITUTE OF
TECHNOLOGY(012)
Subject : Engineering Economics and Management(2140003)
Topic : Explain concepts of law of supply with suitable
example and neat sketch.
Branch : Mechanical
Division: 4 – B1
Prepared by : JERIN SIBI (150120119052)
GUIDED BY : Professor PRASHANT PANDYA

2. CONTENT
• What is supply?
• Concept of law of supply with neat sketch and
example.

3. WHAT IS SUPPLY?
• Supply is a fundamental economic concept that
describes the total amount of a specific good or service
that is available to consumers. Supply can relate to the
amount available at a specific price or the amount
available across a range of prices if displayed on a
graph. This relates closely to the demand for a good or
service at a specific price; all else being equal, the
supply provided by producers will rise if the price rises
because all firms look to maximize profits.

4. CONCEPT OF LAW OF SUPPLY
• The law of supply is a fundamental principle of economic
theory which states that, all else equal, an increase in
price results in an increase in quantity supplied.
• In other words, there is a direct relationship between
price and quantity: quantities respond in the same
direction as price changes.
• This means that producers are willing to offer more
products for sale on the market at higher prices by
increasing production as a way of increasing profits.

5. • As shown in the diagram, suppose Q2 is the
supply at particular price P2. Supply increases to
Q3 with increase in price to P3 whereas supply
decrease to Q1 with decrease in price to P1.

6. DETERMINANTS OF SUPPLY
• Following are the determinants of supply in the
market.
• Selling Price
• Number of seller
• Price of raw material
• Future Expectation
• Technology

7. SELLING PRICE
• Selling price is decided after adding certain amount of
profit in the cost. If selling price is increased, the profit
will also increases. This increases the profit of the seller,
which motivates to supply more quantity. So, increases
in selling price increases the supply of goods.

8. NUMBER OF SELLER
• Supply of products in the market is the sum of
individual’s seller’s supply. If the number of sellers
are more, then quantity supplied will be more. So,
as the quantity supplied in the market increases, the
price of goods decreases.

9. PRICE OF RAW MATERIAL
• Price of raw materials directly effects the quantity
supplied in the market. Keeping the selling price
constant, if the prices of raw materials required to
produce the goods increases, the seller will
produce less amount of goods. So, this reduces the
quantity of supplied goods.

10. FUTURE EXPECTATIONS
• Future expectations affects the supply for a goods
or services today. If supplier anticipate the increases
in price in near future, he stores the goods right now
to get more price tomorrow. So, the supplied
quantity would decreases at present

11. TECHNOLOGY
• In the area of technology, rate production of goods is
significantly and hence the input cost is also reduced .
So, sellers are able to supply more amount of goods in
the market at lower rate than the previous era.

12. EXAMPLE OF SUPPLY