The document explains the concept of supply in economics, defining it as the amount of goods producers are willing to sell at various prices over time. It details the relationship between supply and demand, emphasizing that supply is influenced by various factors such as production costs, technology, and government policies. Additionally, it introduces the supply schedule and the law of supply, illustrating how price changes affect the quantity supplied.

1. SUPPLY
Dr.M.MADHAVAN

2. INTRODUCTION
• In the ordinary language the term supply may have
several different meanings.
• It may mean the total stock of goods in existence.
• The amount of goods offered for sale per unit of time.
• Economists agree that supply means the commodity
offered for sale at a price. In other words, supply
refers to total supply offered for sale at a price to
retailers and wholesalers. Sometimes the term market
supply is used to denote the supply of perishable
commodities with retailers only.

3. DEFINITION
• Prof. Mc Connel defines supply as a schedule, which
shows the various amount of product, which a producer is
willing to and able to produce and make available for sale
in the market at each specific price during some given
period.
• Supply and demand is two important concepts that link
the market behaviour of a consumer with price. The
behaviour of supply factor will be just opposite to
demand factor. The price factor is the resultant of both
supply and demand factors.

4. • Supply depends on scarcity just as demand depends
on usefulness. If a commodity is wanted by every
one, it becomes scarce. If nobody wants, it will
become plentiful. So scarcity is an economic sense
means only in relation to demand.

5. Why then there scarcity of supply, when
scarcity depends on demand factor?
• The answer is obvious. The goods are produced only
with factors of production viz., land, labour, capital,
enterprises etc.
• These factors are by themselves limited. While man’s
needs are plenty, the supply is limited or fewer at any
time, because the supplies of the production agents
are limited.
• Hence there are million of goods with prices but
each one is scares in relation to demand.

6. SUPPLY SCHEDULE
• Supplies of different quantities placed on the
market at different prices are mentioned with
a help of a schedule called supply schedule.
Supply also related to time, place and price
like demand. The supply schedule represents
the functional relationship between the
quantity supply and the price.

7. SUPPLY SCHEDULE FOR A
COMMODITY X
PRICE QUANTITY SUPPLIED IN UNITS
3 40
4 50
5 60
6 75
7 90

8. LAW OF SUPPY
• From the schedule it is become clear that, when the price is the
highest i.e. to be 7 per unit, the supply is maximum i.e. 90 units.
• And when the price falls to Rs. 3. The supply gets contracted
to 40 units. So there is functional relationship between the price
and the quantity supplied.
• This relationship is stated in the term of law of supply. It
states that other things being constant, the price of a
commodity has direct influences on the quantity.
• When the price of the commodity rises its supply is extended
and vice versa.

9. THE SUPPLY CURVE
• With the help of the supply schedule we can draw
the supply curve. The supply curve ‘SS’ slopes
upward from left to right showing larger supply of
higher price.

10. SUPPLY CURVE
In the diagram,
X axis = Quantity Supplied
Y axis = Price of the Commodity
“SS” = Supply Curve

11. DETERMINES OF SUPPLY
• No Of Firms Or Sellers
• Supply is a market depends on the no of firms or sellers producing and
selling in the market when sellers are few, the supply will be small if they
are in large Nos. , the supply will also be large.
• State Of Technology
• It is assumed that in the level of technology of production remains
constant. Generally any improvement in technology will reduce the cost
of production and consequently there will be an increase in supply.
• Cost Of Production
• The cost of production is an important item and assumes to remain
constant. If the cost of production gets reduce the supply curve will shift
down.

12. DETERMINES OF SUPPLY … … ….
• Price Of Related Goods
• If the prices of related products fall, the firm producing many goods may
increase the supply of a particular product, even though its price has turn
up.
• Price Expectation
• It assumes that the seller sells the commodity or supplies the commodity
on the basis of the prevailing prices and he does not expect any change in
price of that commodity. If he feels that future price will be higher he will
reduce the present supply of the product.
• Natural Factors
• It is assumed that, there is no change in the natural factors, as the supply is
governed by the natural factors like rain, draught, etc. This is more so in
agro industries.

13. DETERMINES OF SUPPLY … … …
• Labour Trouble
• It is assumed that there is no labour trouble and
consequent strike or lock out reducing the quantity of
supply.
• Change In Government Policy
• Any change in govt. Policy will affect the supply. A fresh
tax or levy of exercise duty on a commodity will affect the
price of a commodity and as a result, supply will get
affected.