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SUPPLY
Act of providing something that is wanted or needed, often
in large quantities and over a long period of time
The total amount of certain goods available to consumers.
Factors affecting/ Determinants of the supply
 The price of the product itself
 The price of related goods and services
 The production cost
 The price of inputs
 The quantity of production units
 The technology behind the production process
 The producers’ expectations
 Government policies
 Natural and other factors
LAW OF SUPPLY & SUPPLY SCHEDULE
INDIVITUAL AND MAKET SUPPLY CURVE
INDIVITUAL AND MAKET SUPPLY CURVE
CHANGES IN SUPPLY
Increase or decrease in the volume of demand and supply from its
equilibrium. Equilibrium means the point where the supply and
demand curve intersect each other. Due to the effects of the
determinants, demand or supply of a product may change and
demand and supply curve may shift. Such shift affects equilibrium
price and quantity.
1. Increase (shift to the right) in supply;
2. Decrease (shift to the left) in supply;
CHANGES IN SUPPLY
SUPPLY
I) Increase in Supply (Shift to the Right)
Suppose there is a new technology available in the market. Supplier adopts such
new technology. Due to adopting new technology supply increases and other facts
remain the same. When supply increases, it results in an excess supply at the
earlier equilibrium price.
 Supply Increases
 Demand is constant
 Equilibrium price go down
II) Decrease in Supply (Shift to the Left)
Now let us think of the opposite of the above situation. Suppose supplier does
not adopt such new technology available in the market. Old technology which
supplier uses is being obsolete. This will affect the efficiency
of production level. So supply will decrease.
 Supply decreases
 Demand is constant
 Equilibrium price go up

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The Concepts of Supply.pptx

  • 1. SUPPLY Act of providing something that is wanted or needed, often in large quantities and over a long period of time The total amount of certain goods available to consumers. Factors affecting/ Determinants of the supply  The price of the product itself  The price of related goods and services  The production cost  The price of inputs  The quantity of production units  The technology behind the production process  The producers’ expectations  Government policies  Natural and other factors
  • 2. LAW OF SUPPLY & SUPPLY SCHEDULE
  • 3. INDIVITUAL AND MAKET SUPPLY CURVE
  • 4. INDIVITUAL AND MAKET SUPPLY CURVE
  • 5. CHANGES IN SUPPLY Increase or decrease in the volume of demand and supply from its equilibrium. Equilibrium means the point where the supply and demand curve intersect each other. Due to the effects of the determinants, demand or supply of a product may change and demand and supply curve may shift. Such shift affects equilibrium price and quantity. 1. Increase (shift to the right) in supply; 2. Decrease (shift to the left) in supply;
  • 7. SUPPLY I) Increase in Supply (Shift to the Right) Suppose there is a new technology available in the market. Supplier adopts such new technology. Due to adopting new technology supply increases and other facts remain the same. When supply increases, it results in an excess supply at the earlier equilibrium price.  Supply Increases  Demand is constant  Equilibrium price go down II) Decrease in Supply (Shift to the Left) Now let us think of the opposite of the above situation. Suppose supplier does not adopt such new technology available in the market. Old technology which supplier uses is being obsolete. This will affect the efficiency of production level. So supply will decrease.  Supply decreases  Demand is constant  Equilibrium price go up