1. Supply is defined as the quantity of a commodity that sellers are willing and able to offer for sale at a given price and time. 2. The law of supply states that the quantity supplied varies directly with price - when price rises, supply increases, and when price falls, supply decreases. 3. The determinants of supply include the goals of firms, price of the good, technology, government policy, and improvements in transport and communication.

1. Supply Analysis

2. Meaning
Supply means the quantity of a commodity that
the sellers are willing and able to offer for
sale at a particular price at any given time.

3. Law of supply:
The quantity supplied varies directly with price;
when price falls, supply will contract and
when price rises, supply will extend.

4. Determinants of supply:
 The supply of a commodity depends upon the
goals of firms:
The supply of a commodity increase if its
producers desire to sell as much as possible, even at
the cost of profits. Supply is reduced if the producers
desire to derive maximum profits. If producers desire
to produce more of luxury items than necessaries
the supply of luxuries increase & the supply of
necessaries is reduced.

5.  Price of the good:
The higher the relative price of a good, the
greater the quantity of it that will be supplied. This is
because goods and services are produced by the firm
in order to earn profits, profits rise if the price of its
product rises.

6.  Technology:
Inventions and innovations tend to make it possible
to produce more or better goods with the same
resources & thus they tend to be increase the
quantity supplied of some products & to reduce the
quantity supplied of products that are displaced.

8.  Government policy:
Ex: Sales tax, excise duty.

10.  Improvement in transport & communication:
This will facilitate free & quick movements of
goods & services from production centers to
marketing centers.

11. Elasticity of Supply:
 Perfectly Elastic Supply-
When a slight change in price leads to
immeasurable changes in supply.

12.  Perfectly Inelastic Supply:
When a supply of a commodity remains constant
& does not change in whatever may be the change in
price, it is said to be absolutely or perfectly inelastic
supply.

13.  Relatively Elastic Supply:
If changes in supply is more than proportionate to the
change in price, elasticity of supply is greater than
one.

14.  Relatively Inelastic Supply:
If the change in supply is less than proportionate to a
given change in price, then elasticity of supply is
said to be less than one.

15.  Unitary Elastic Supply:
If proportionate change in supply is exactly equal &
proportionate to the change in price, then elasticity
of supply is equal to one.

16. Supply Schedule:
Supply schedule is a tabular representation of different
quantities of a commodity supplied at varying prices.
It represents the functional relationship between
quantity supplied & price.