2. Supply refers to the quantity of a commodity which
producers or sellers are willing to produce and offer
for sale at a particular price’, in a given market, at a
particular period of time
3. Quantity, Price and sale are the Important aspects
of supply analysis
Supply is always states in terms of quantity desired
At what price it is supplied
Time period of sale
4. Supply schedule may be defined as a table which shows the
various amounts of a product which producer is willing to and
able to produce and make available for sale in the market at
each specific price in a set of possible prices during a given
period
It is a schedule showing the supply of different quantities
placed on the market at different prices.
Supply is related to time ,place and price like demand
Supply schedule represents the functional relationship
between quantity supplied and prices.
5. Table showing different quantities supplied by individual
seller at different prices.
Straight line upwards sloping supply curve implies that the
supply of product increases with increase in the price of the
product.
Price
Rs.
Quantity
supplied
3 40
4 50
5 60
6 75
7 90
6. Market supply refers to the sum of individual suppliers supply
to the market at different prices of the product
Price of the
product. Rs.
Individual
supply(Units)
Market
supply(Units)
A B C
3 40 35 40 115
4 50 40 45 135
5 60 50 55 165
6 75 70 70 215
7 90 80 75 245
7. Market supply curve represents the direct relationship between
quantity supplied and price of the product.
8. Determinants of supply:
Price of relate product
Number of firms or sellers
State of technology
Government policy
Cost of production
Price expectations
Natural factors
Labour troubles
Sx= f (Pr,Ns,St,Gp,Cp,Pe,Nf,Lt….etc)
9. Supply of a product depends purely on its prices not on the
prices of other products relate to it
Producers always have the tendency of shifting from the
production of one commodity to another commodity. If the
prices of another commodity increases, especially substitute
goods, producers will find it more profitable to produce that
commodity by reducing the production of the existing
commodity.
10. Market supply of the product depends upon Number of firms
in the Market
If sellers are few in number the supply will be the small. If
the sellers are large in number supply will also be large
11. Level of technology and production remains constant.
New technologies and innovative methods or process of
production will reduces the cost of production and there will
be increase in supply.
Any obstacle to existing technology, will increase cost of
production and there by supply will decrease.
12. Any change in government policies may affect the supply
Increase in taxes may cause in decrease in supply
Increase in subsidies may cause increase in supply
13. Price Expectations:
Sellers sells the product or supplies the production the basis
of prevailing prices and he will not expect any change in the
prices of the product
If future price increases he will reduces the currents supply
If he feels any decrease in future prices He will be tempted to
sell more at current prices
Cost of production:
The cost of production affects the supply of product. if cost
of production is reduced. supply will increase
14. Law of supply states that other things remaining the same, the quantity of
any commodity that firms will produce and offer for sale rises with rise in
price and falls with fall in price.’
i.e. Higher the price, higher will be quantity supplied and lower the price
smaller will be quantity supplied.
‘Other things remaining the same’ means determinants other than own
price such as technology, goals of the firm, government policy, price of related
goods etc. should not change.
15. • There is no change in the prices of the factors of production.
• There is no change in the technique of production.
• There is no change in the goal of firm.
• There is no change in the prices of related goods
• There is no expectation on future price changes
16. other things remains constant the supply of commodity
expand f there is a rise in price ,and contract, if there is a fall
in price.
This expansion and contraction of supply due to the change
in prices of the commodity
aaaAAaaaaaaaaaaaaa At OP price, supply is OM. when price
fall falls to OP1,supply contrast toOM1
and and when price increases to
oOP2,supply op2,supply expands to OM2
17. At a given price more quantity is supplied there is increase in
supply and if at the same price less quantity is supplied,
supply is said to have decreased.
Let us assume that at OP price, OM
qua quantity is supplied. If at same OP
price OM2 quantity is supplied there
is increase in supply and if at same
price OM1 quantity is supplied
supply is said to have decreased
